With uniform tax laws, the EU will "level the playing field" for crypto companies

According to the proposed legislation, businesses of any size processing cryptocurrency transactions for clients in the European Union will soon need to report these for tax purposes.

The policy states that even non-European crypto-asset operators will need to report transactions if they have clients who are EU residents. They proposed it as an addition to a larger package of anti-tax evasion measures.

Companies would be required to give tax authorities personal information about their customers, such as where they live and when and where they were born.

Additionally, they would have to list the sum the person paid for the cryptocurrency or the proceeds from selling it.

In a document outlining the directive, policymakers claimed that enforcing a requirement to report income from cryptocurrency investments would help EU member states accurately determine the amount of taxes they owe, generating an additional income of up to €2.4 billion ($2.53 billion).

The commission asserts that standard reporting regulations would benefit the sector as well.

“Transparency on income earned by crypto-asset investors would improve the level playing field with more traditional assets,” the proposal said.

The rules would cost the EU an initial €300 million plus an additional €25 million annually. Policymakers claim that the initiative will have a “limited” impact on small- and medium-sized businesses because they already have access to the information that needs to be reported.

“While the initiative will bring compliance costs, it may be more favorable to SMEs to have a single set of rules across the EU, rather than a potential patchwork of reporting requirements across the EU,” the Council’s summary of its impact assessment said.

Crypto enthusiasts criticize the EU

Advocates for the industry worry that the rule will unfairly burden businesses operating in the area.

“The information requested from the CASPs [Crypto Asset Service Providers] is extremely significant and complex to calculate...The estimated cost for service providers seems underestimated, and the mass of information to be produced and sent will be enormous. Will [Member State] tax authorities have the means to process this information?” According to European Crypto Initiative President Simon Polrot.

After at least eight weeks of public comment on the passed legislation, they will present any responses to the European Parliament and Council for consideration during the legislative debate.

Markets in Crypto Assets, also known as MiCA, the EU's historic crypto regulation package, are currently being completed.

It is expected that the bill, which would create a framework for crypto services among its members, will be put to the vote in February.