European Parliament calls for an end to crypto asset non-taxation

European Parliament adopted a non-binding resolution on 30 June 2022 calling for a better use of blockchain to fight tax evasion and for member states to coordinate more on the taxing of crypto assets.

The resolution, drafted by Lídia Pereira (EPP, PT) and adopted in the Economic and Monetary affairs committee, sets out a framework through which both goals of using blockchain in taxation and better taxing crypto assets can be achieved.

1. Crypto asset taxation

The resolution says that crypto assets must be subject to fair, transparent and effective taxation. It also invites authorities however to consider a simplified tax treatment for occasional or small traders and small transactions.

For this, the resolution firstly calls on the Commission to assess the ways in which the different member states tax crypto assets and evaluate these methods, and identify the different national policies regarding the fight against tax evasion in the field of crypto assets. The resolution then also calls for a clear and broadly accepted definition of crypto assets and for a coherent definition of what would constitute a taxable event. On the latter, the resolution suggests that the conversion of a crypto asset into a fiat currency might be the more appropriate choice and it asks the Commission to specifically assess this option, along with a more general one concerning the identification of possible taxable events. The cross-border nature of crypto assets trading makes it also important to know where the taxable event would have taken place, the resolution adds. Finally the resolution asks for the amendment of the directive on administrative cooperation on taxation to include crypto assets in the exchange of information framework.

2. Leveraging blockchain

The resolution says that national administrations must use all available instruments to facilitate efficient tax collection, and it identifies blockchain as one of these instruments. Blockchain’s unique features could offer a new way to automate tax collection, limit corruption and better identify ownership of tangible and intangible assets allowing for better taxing mobile taxpayers, the resolution claims.

Work must be undertaken to identify the best practices of using technology to improve the analytical capacity of tax administrations, the resolution says. It also calls on the Commission to better integrate the use of blockchain into the different fora and programmes dealing with taxation and cooperation in this field. Member states should also press on with their efforts to reform their tax authorities, namely through their modernisation the resolution adds.