EU seeks to simplify tax rules on digital assets and streamline collection
The European Parliament calls for clearer definitions and a simplified tax structure to deal with digital assets. the deputies have adopted a non-binding resolution that could eventually see uniform rules for the valuation and taxation of digital assets across EU member states, and use blockchain functionality to develop more effective methods of tackling tax avoidance .
It echoes recent initiatives by the United States Congress to create uniform and simple rules for the taxation of digital asset transactions, such as the Responsible Financial Innovation Act. Users and traders of digital assets have long accepted taxation as a reality. However, there are frequent complaints about the clarity of the rules, different rules between states/nations and competent authorities on different aspects of the digital asset world.
The European resolution calls for a “clear and widely accepted definition of crypto assets and a consistent definition of what would constitute a taxable event.” He recommended that any conversion between digital assets and national fiat currency is the best definition of such an event. However, he asked the European Commission to look specifically at this point and to identify other possible issues (for example, in which country should a cross-border payment be taxed).
He also said that Member States’ national administrations should use all available instruments to enable effective taxation methods for digital assets. Blockchain networks themselves have features that could automate tax collection, identify owners and reduce corruption, he said. Calling it “leveraging blockchain for better tax collection,” he recommended further research to provide analytical capacity for tax collection agencies and national bodies to continue modernizing their approaches to digital assets.
In addition, the draft recommended that national tax agencies in EU members work to unify their own definitions of taxation of digital assets and add digital assets to the information exchange framework in the directive. of the Union on administrative cooperation.
What blockchains could be “mined”?
The EU’s call to leverage blockchain technology to streamline tax collection is interesting. This works in accordance with Bitcoin’s “triple-entry bookkeeping” principle, in which the blockchain adds a defined (and unalterable) third record to standard double-entry bookkeeping. It would be better to use a blockchain that can perform additional functions on the base or on separate contract layers to do this efficiently – BSV does this better due to its ability to handle large (actually unlimited) amounts of data .
It also re-emphasizes the importance of keeping records on the channel. If transactions are moved to separate “side chains” or payment networks, as is necessary for BTC to function as a payment network, it would be more difficult for tax authorities to keep records of each transaction and therefore automate tax processes.
The resolution was drafted by Portuguese MEP Lídia Pereira from the European People’s Party (EPP) group. It was passed with 566 votes in favour, seven against and 47 abstentions at a plenary session this week. The European Parliament itself cannot initiate legislation, but instead adopts certain resolutions to present to the European Commission, which would have to approve it before a formal vote takes place. From there, individual national parliaments should each legislate to enact new laws.
This week’s EU resolution is more of a guideline for the “work to be done” than an attempt to lay down precise rules. However, given the growing popularity of digital asset trading and business, governments are eager to create more transparent tax frameworks that reduce confusion and help fight tax evasion. There is clear support for clearer rules among lawmakers in countries where the trade is popular, while trading exchanges tend to show support for new rules as long as they are consulted as part of the process, which makes it easier their work.
Watch: Presentation of the BSV Global Blockchain Convention, BSV On-chain Ecosystem Development in Europe
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