The European Parliament has passed a resolution about how to tax cryptocurrency and how to use blockchain technology to make it easier to collect taxes.
- The European Union’s Parliament passed a non-binding resolution about how to tax crypto assets and how to use blockchain technology to improve the efficiency of tax collection.
- The resolution asked the Commission to think about making the exchange of a crypto asset to fiat currency a taxable event.
- Authorities in Europe have been very active in regulating crypto, with consumer protection and preventing money laundering (AML) as two of their main goals.
The European Parliament has passed a resolution on cryptocurrency taxes. According to a press release from October 4, members of the European Union’s Parliament (MEP) passed a non-binding resolution that sets up a framework for taxing cryptocurrency and using blockchain technology in taxation.
According to the resolution, crypto assets “must be subject to fair, transparent, and effective taxation.” It does, however, request that authorities consider simplifying taxation for “occasional or small traders and small transactions.” Small investors have been worried about high taxes in some countries, like India. This will make them feel better.
It also calls for a clear and broad definition of crypto assets to aid the taxation process and determine what constitutes a taxable event. As a suggestion, it requests that the Commission consider any conversion of a crypto asset to fiat currency as the best option. It also emphasizes knowing where the taxable event occurs—given the cross-border nature of crypto—and requesting the inclusion of crypto assets in the exchange of information framework.
Surprisingly, the MEPs also advocated for the use of blockchain technology in tax collection. It recognizes the technology’s benefits and believes it can help “automate tax collection, limit corruption, and better identify ownership of tangible and intangible assets, allowing for better taxing of mobile taxpayers.”
Europe Is Working on Crypto Regulation, and It Is Mostly Positive.
When it comes to regulating the cryptocurrency market, European authorities have been among the most active. One of the reasons for the regulation is to protect consumers, and another is to stop illegal activities from being paid for with cryptocurrency.
However, while it has been very active in terms of regulation, it has not always been strict. The EU has been supportive of cryptocurrencies, but it insists on checks and balances. It has been working on legislation and raising awareness of NFTs and stablecoins.
Not all entities in the region support cryptocurrency. Christine Lagarde, the head of the European Central Bank, has expressed her disdain for the asset class on numerous occasions. During an online panel held by the Bank of France with Jerome Powell of the Federal Reserve, she said that the Bank of France “stands for bankers.”