European Parliament looks to tax cryptos to help fund EU budget
(Kitco News) - In an effort to shore up its finances and ensure that it can deliver on the key policy objectives of the EU, lawmakers of the European Parliament have proposed a tax on cryptocurrencies as part of their updated 2023 budget. The annual budget of the bloc is roughly 170 billion euros ($185 billion).
A draft report of the budget proposal notes that the cryptocurrency market has been growing rapidly since the 2008 financial crisis, with the total crypto market capitalization reaching EUR 2 trillion in May 2021.
The revenues from a European tax on crypto-assets would “flow into the European budget as a new own resource,” the report said. It went on to note that “crypto-assets are progressively considered as a genuine means of payment and part of investment strategies.”
According to the Committee on Budgets, regulating and taxing crypto-assets at the EU level is more efficient than regulating them at the national level due to their high mobility and cross-border capabilities.
“A European tax on crypto-assets would foster the emergence of a harmonized tax framework for crypto-assets, be more consistent with the crossborder nature of the crypto-assets market, and encourage the adoption of tax standards at the global level,” the report said.
The committee outlined several taxation options for cryptos, including a tax on capital gains resulting from crypto-asset activities that is “based on a uniform levy rate for all EU Member States,” a tax on crypto-asset transactions or a tax on the mining and trading of crypto-assets that is determined by their electricity consumption and environmental impact.
|EU banks will need to back crypto one-for-one with euros, will manage digital euro privacy|
The report called on the commission to “assess the impact of these options on the European crypto-asset market,” estimate the potential revenues such an approach would generate and come up with a concrete proposal that can be put to a vote. Lawmakers on the committee have until Feb. 2 to propose changes to the report.
Aside from the implementation of taxes on cryptocurrency dealings, the budget committee report also recommended changes to the EU’s corporate tax policy and a tax on carbon-intensive imports, and called for the establishment of an EU “fair border tax” as additional ways to help generate revenue to fund the budget.