The EU Parliament Votes in Favor of Cryptocurrency Taxation

One of the biggest gripes that governments across the world have with the crypto industry is that they cannot control the cash flow and directly affect exchanges. While the very nature of cryptocurrencies like Bitcoin and Ethereum prevents any external attempts of controlling the network and cash flow, there are other ways politicians can ensure that they have at least some control. The most obvious one — is taxes.

The EU Parliament decided to fight tax evasion occurring in the crypto industry by coordinating regulatory efforts in the field of taxation.

October 4 was a very important day in the history of crypto

The European Parliament voted for (566 out of 705) of the non-binding resolution that was proposed by Lidia Pereira. Now, 27 EU states will use simplified taxing for individual and institutionalized crypto traders regardless of the transaction size. National taxation bodies will use blockchain technology to ensure that tax collection is conducted fairly and efficiently.

What was more interesting about the resolution is that the final right to decide whether a transaction should be taxed is given to national authorities which should decide whether converting cryptocurrencies to traditional fiat money results in net profit or a “taxable event”. The statement from the Parliament says that blockchain offers a unique way to automate tax collection and that authorities must put effort into identifying the best practices for tax administrators to employ.

It is happening on a backdrop of CBDC announcements

Many countries in Europe (the UK, France, Italy, Switzerland, and many others) have been announcing that they are developing or deploying pilot Central Bank Digital Currencies and other digital assets. One of the leaders in this space is France which already has blockchain-based securities in its Jura project. Portugal is also steaming ahead with its CBDC program.

Governments are looking into new opportunities to control money even if they cannot disrupt the crypto industry and affect how people use Bitcoin and Ethereum. The decision of the EU Parliament is worrying, but it won’t disrupt the industry and crypto trading in Europe. It is a compromise that many crypto investors are willing to take.

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