Members of the Parliament of the European Union passed a non-binding resolution that is related to the taxation of the crypto asset class and the use of blockchain tech to make tax collection more efficient.
One suggestion the resolution made was for the Commission to consider converting a crypto asset to fiat currency as a taxable event.
Authorities from Europe have been very active in crypto regulation, holding consumer protection and AML as key philosophies in their bid to regulate the market.
The European Parliament has adopted a resolution relating to taxes for the crypto market. A press release published on October 4 said that the Members of the Parliament of the European Union (MEP) passed a non-binding resolution that delivers a framework for taxing crypto and using blockchain tech in taxation.
The resolution says that crypto assets “must be subject to fair, transparent, and effective taxation.” However, it does ask authorities to consider a simplified tax treatment for “occasional or small traders and small transactions.” This will be a relief for smaller investors worried about heavy taxation, which has happened in some countries, such as India.
It also calls for defining crypto assets clearly and broadly to aid the taxation process and determine what makes for a taxable event. As a suggestion, it asks the Commission to consider any conversion of a crypto asset to fiat currency as being the most appropriate option. Two additional points it highlights are knowing where the taxable event takes place — given the cross-border nature of crypto — and asking for the inclusion of crypto assets in the exchange of information framework.
Interestingly, the MEPs also called for blockchain technology for use in tax collection. It acknowledges the benefits of the technology and believes it could help “automate tax collection, limit corruption and better identify ownership of tangible and intangible assets allowing for better taxing mobile taxpayers.”
Europe Working on Crypto Regulation, Mostly Friendly
The European region’s authorities have been among the most active when it comes to regulating the cryptocurrency market. It has identified consumer protection as one of the driving factors behind the regulation, along with preventing illicit activities from being funded by crypto.
However, while it has been very active with respect to regulation, it has not necessarily been strict. The EU has been welcoming of cryptocurrencies, but demands checks and balances. It has been working on laws and putting NFTs and stablecoins on the radar.
Not all entities in the region are favorable toward crypto. European Central Bank Chief Christine Lagarde has made her dislike for the asset class known on many occasions. In an online panel hosted by the Bank of France alongside The Federal Reserve’s Jerome Powell, she said that the agency “stands for bankers.”