The Council of the European Union (EU) has adopted a directive to enhance cooperation amongst national taxation authorities, particularly on crypto-assets transactions.
The Oct. 17 announcement signifies a significant shift in the regulatory landscape of EU’s crypto-assets, demonstrating a proactive approach towards the rapidly digitalizing economy. As the EU Press release reported, the directive adopts comprehensive amendments to EU rules on administrative cooperation on taxation.
This directive aims to fortify the existing legislative framework by broadening the scope for registration and reporting obligations and augmenting the overall administrative collaboration of tax administrations.
Central to this is the inclusion of additional categories of assets and income, specifically crypto-assets. The new regulations compel the automatic exchange of information between tax authorities, which the reporting crypto-asset service providers must provide.
Until now, the EU believes the decentralized nature of crypto-assets has posed significant challenges for member states’ tax administrations in ensuring tax compliance. The inherent cross-border character of crypto-assets necessitates robust international administrative cooperation to ensure effective tax collection according to the EU.
This directive is the EU’s response to these challenges, covering a broad scope of crypto-assets, including those issued in a decentralized manner, stablecoins, e-money tokens, and specific non-fungible tokens (NFTs).
According to the EU Meeting related to the directive, it also reflects upon the economic governance framework of the EU, which represents a set of standard rules for national fiscal and monetary policies applying to all member states. These rules are designed to ensure the sustainability of public finances, promote convergence, and address macroeconomic imbalances.
As expressed by Nadia Calviño, the acting Spanish first vice-president and minister for economy and digitalization, the move aims to reach a balanced agreement before the year’s end,” reinforcing the economic and monetary union and paving a path for sustainable growth and fiscal responsibility.
This significant step follows the indications from the Council in its report to the European Council on tax issues on Dec. 7, 2021. It expressed expectations for the European Commission to introduce a legislative proposal 2022 for further revision of the directive 2011/16/EU on administrative cooperation in the field of taxation (DAC), addressing the exchange of information on crypto-assets and tax rulings for wealthy individuals.
The Council agreed on proposed changes to the directive on May 16. The European Parliament then provided its opinion on the directive on Sept. 13 as part of the consultation process. Member states unanimously adopted the directive in the Council. It will now be published in the Official Journal and go into effect 20 days after publication.
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Author: Liam ‘Akiba’ Wright