There is an upcoming talk between the European Union (EU) and member countries about adopting a uniform tax regime for crypto assets in Europe. Accordingly, by next year, the discussion will aim at ending the different tax regulations across the bloc.
EU Plans Common Tax Regime for Digital Assets Earnings
Per reports, the executive EU body based in Brussels and the European Commission (EC) will soon begin the discussion with finance ministers of member countries. The aim is to ascertain the possibility of establishing a union-wide tax system for crypto assets.
Furthermore, sources close to the development revealed that the talks would begin in 2023. The focus of the discussion will be on deliberating and sharing best practices regarding how to utilize crypto wealth.
An EC spokesperson added: “Tax administrators across the bloc are currently faced with the challenges of classifying crypto assets, which affect fair taxation and efficiency.”
However, implementing a single tax regime across the bloc is more challenging than it appears. The EU will have to introduce additional requirements for crypto service providers to collect details of token holders, individuals, and enterprises.
Moreover, the report revealed that exchanges would share these details with tax authorities across the bloc. Doing this will provide tax authorities with a clear view of digital asset holdings.
The European Commission is expected to implement these new guidelines in December 2022 or January 2023. However, the commission will likely begin its enforcement in 2026, thus allowing it to introduce the crypto tax.
Europe Move To Enforce Crypto Regulations
For some time, European monetary policymakers have been working on developing a comprehensive regulatory framework for the crypto industry. As a result, the Market in Crypto Assets (MiCA) was developed to address the regulatory inconsistency within Europe.
Mica is the agreed-upon guideline the union introduced for the digital asset industry. However, its implementation was further delayed by the language barrier.
Several media reports indicated that the commission would translate the document into all the official languages of the EU before final approval by the parliament. The MiCA bill is expected to come into force by 2024.
At the moment, member states have different crypto regulations that they enforce to tax earnings from digital assets. However, the rates differ from 0% to 33% depending on the country.
Meanwhile, several authorities have started to review their existing policies in anticipation of a possible decision from EU policymakers. For example, one EU country that does not tax crypto earnings is Portugal.
The country is considering imposing a levy on short-term investments beginning next year. In addition, the country’s budget for 2023 specifies that traders who gained from any crypto investment made under a year are qualified to be taxed 28%.
With the rapid adoption of crypto assets, Europe is bracing to regulate the industry more than any region.
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