New tax transparency rules will help Member States shine a light on the crypto-asset sector
The Commission welcomes the political agreement (‘general approach’) reached by EU Finance Ministers today on new tax transparency rules for all service providers facilitating transactions in crypto-assets for customers resident in the EU. Based on a Commission proposal, the new rules complement the Markets in Crypto-assets (MiCA) Regulation and transfer in funds Regulation (TFR), and are fully consistent with the OECD initiative on the Crypto-Asset Reporting Framework.
Fair and effective taxation is key to securing revenues for public investment and services, while creating a business environment in which innovation can flourish. However, tax authorities currently lack the necessary information to monitor proceeds obtained by using crypto-assets which are easily traded across borders. This severely limits their ability to ensure that taxes are effectively paid, which means European citizens lose important tax revenues.
The Directive will improve Member States’ ability to detect and counter tax fraud, tax evasion and tax avoidance, by requiring all crypto-asset providers based in the EU – irrespective of their size – to report transactions of clients residing in the EU. Moreover, the updated Directive has been extended in scope to include reporting obligations of financial institutions regarding e-money and central bank digital currencies and the automatic exchange of information on advance cross-border rulings used by natural persons.
The new reporting requirements on crypto-assets, e-money and central bank digital currencies will enter into force on 1 January 2026. Final adoption of the new rules will be possible when the consultative opinion of the European Parliament becomes available.
Crypto-assets and e-money have great potential to drive economic activity and innovation – but they also carry risks of reducing transparency and enabling tax evasion or fraud. Updating our tax rules to address these issues will help national administrations to collect tax more efficiently and keep up with evolving technology as Europe moves forward with its digital transition.
Today’s agreement is good news for tax transparency in a financial world that is evolving at breakneck speed. Anonymity means that many crypto-asset users making significant profits fall under the radar of national tax authorities – and this is clearly not acceptable. Once this directive enters into force, Member States will get the information they need to ensure that taxes are paid on gains made in trading or investing in crypto-assets.