In a significant move to address the challenges posed by the rapid digitalization of the economy, the Council of the European Union (EU) has adopted a directive aimed at enhancing cooperation among national taxation authorities, particularly regarding crypto-assets transactions. This directive represents a pivotal moment in the EU’s regulatory approach to cryptocurrency, emphasizing the need for improved tax compliance in the growing crypto sector. Here’s what you need to know about this new development:
The EU has taken proactive steps to bolster cooperation between member states’ tax authorities by adopting a new directive. This directive signifies a notable shift in the regulatory landscape of the EU’s approach to crypto-assets. It brings about comprehensive amendments to the EU’s rules on administrative cooperation in taxation.
A central aspect of this directive is the inclusion of crypto-assets within its scope. The directive expands the registration and reporting obligations, promoting overall administrative collaboration among tax administrations. The EU recognizes the unique challenges posed by the decentralized nature of crypto-assets, particularly in ensuring tax compliance across borders. To address this, the directive mandates the automatic exchange of information between tax authorities, with reporting crypto-asset service providers being obligated to furnish this data.
EU’s crypto regulation progress and impact
This directive casts a wide net in its approach to regulating crypto-assets. It encompasses a range of crypto-assets, including those issued in a decentralized manner, stablecoins, e-money tokens, and specific non-fungible tokens (NFTs). By doing so, the EU aims to address the evolving landscape of digital assets comprehensively.
The directive is not isolated but is rather an integral part of the EU’s economic governance framework. This framework sets standard rules for national fiscal and monetary policies that apply to all member states. It is designed to ensure the sustainability of public finances, foster convergence, and address macroeconomic imbalances.
Nadia Calviño, the acting Spanish First Vice-President and Minister for Economy and Digitalization, emphasizes that the directive’s goal is to reach a balanced agreement by the end of the year. This, in turn, will reinforce the economic and monetary union and pave the way for sustainable growth and fiscal responsibility, aligning the EU with its broader economic objectives.
The Council’s actions leading up to this directive have been carefully planned. The Council reported to the European Council on tax issues, expressing its expectations for the European Commission to introduce a legislative proposal. This proposal aimed to further revise the directive 2011/16/EU on administrative cooperation in taxation (DAC), specifically focusing on the exchange of information related to crypto-assets and tax rulings for high-net-worth individuals.
Following the proposal’s formulation, the Council agreed on the proposed changes to the directive. Subsequently, the European Parliament provided its opinion on the directive as part of the consultation process. The culmination of these efforts was the unanimous adoption of the directive by member states within the Council.
The newly adopted directive will now move to the next phase of becoming law. It will be published in the Official Journal, and it is set to go into effect 20 days after its publication. This step marks the beginning of a new regulatory landscape for crypto-assets within the EU.
