The cryptocurrency industry has advanced significantly over the years. Although the ideas behind cryptocurrencies date back much further, the industry as we know it today has only existed for about ten years. Nevertheless, the asset class has quickly established a solid reputation in the finance industry.
Today, many governments place a high priority on taxing cryptocurrency investments. Nevertheless, some nations are more accepting of cryptocurrencies and digital assets than others.
In one of its recent proposals, the European Union addressed the fact that it will be strengthening measures to combat tax evasion and fraud.
European Union’s new proposal will be a nightmare for tax evaders
The European Commission addressed plans to require cryptocurrency firms to report their users’ holdings to tax authorities. However, the EU is still figuring out ways to implement these measures with wallets and exchanges that are outside its jurisdiction.
The proposed tax rules called “The Eighth Directive on Administrative Cooperation”, or DAC8, will likely aid in bringing in billions of euros’ worth of tax evasion funds.
The lack of centralized control for crypto assets, its pseudo-anonymity, valuation difficulties, hybrid characteristics, and the rapid evolution of the underlying technology, as well as their form, are challenging in regard to tax obligations.”
Paolo Gentiloni, EU tax commissioner, stated that the initial focus is on EU residents, even if they use crypto providers from elsewhere. The new proposed tax plan requires any cryptocurrency firm with clients based in the EU to register and report it to the authorities.