The EU is planning on bringing the new EU crypto tax laws which will be agreed upon by the end of next week. It would require the crypto companies to have registration with the tax authorities in the EU, even if they don’t operate in the region or provide NFTs only.
As per the draft bill provided in accordance with the freedom of information laws, the European Union wants to force crypto companies to provide information about their clients’ holdings to the tax authorities.
The law about sharing data which is set on the model provided by the Economic Cooperation and Development (OECD) will be finalized after the finance ministers discuss it the next week (20th May 2023).
After that law is passed, it will allow tax authorities to exchange critical information with other nations in the 27-nation bloc. The EU Commission officials also stated that the law has gained unanimous acclaim at a meeting held earlier.
However, a few people that are closely monitoring the matter have said that there are a few finance ministers who are still awaiting formal approval from their respective parliaments.
What Does The New Bill Entail?
The bill that was presented on the 5th of May 2023 has the same proposals that the European Commission made in December in a bid to prevent EU citizens to hoard crypto coins abroad to hide from the tax authorities.
European Commission would now need to work on setting up a network of crypto asset operators’ by the end of 2025. This would mean that they would have to bring forward the previous deadline set by one year. Furthermore, it also implies that the rules will apply from 1st January 2026.
On a controversial note, the law called the eighth directive on administrative cooperation (DAC8) still has NFT trading platforms that people can use to make payments or investments. Additionally, foreign crypto firms can also report to international authorities that comply with the EU rules and guidelines.
Cryptocurrencies and First Europe-Wide Regulation
Back in April 2023, the European Parliament passed the MiCA (Markets in Crypto-Asset) legislation to regulate the crypto market.
It granted sweeping powers to authorities that will allow them to regulate the entire crypto market, enhance the monitoring of price fluctuation, and ensure complete protection of the consumers.
With this bill, the tax authorities now have the power to trace any transaction that is beyond the 1,000 euros limit. Furthermore, it also covers different aspects of the crypto industry such ICOs (Initial Coin Offerings) and other protective measures for preventing money laundering.
Changes in the MiCA legislation
The key changes in the MiCA legislation were the capability to track transactions above the limit of 1,000 euros. It would include all transactions made from self-hosted wallets to centralized wallets, similar to those made on crypto exchanges.
However, the rules won’t apply to peer-to-peer transactions or transfers that don’t have any involvement in centralized transactions. The regulatory authorities will monitor the launch of new stablecoins in the market which it considers as asset-reference and e-money tokens.
Furthermore, it will also provide oversight of the ICO made to the public. The idea of the legislation is to help customers stay informed about the risks, costs, and fees associated with their crypto transactions.
In addition to these, there are also preventative measures that would limit crypto market manipulations, funding to terrorist groups, money laundering, and more.
Companies providing crypto services would now have to register with a one EU member country minimum. Additionally, regulatory authorities such as European Securities and Markets Authority or the European Banking Authority would ensure complete compliance with the laws.