Crypto Firms May Have to Report EU Tax Evaders

The EU has proposed new tax transparency rules for crypto transactions.

During a press conference on Thursday (Dec. 8), Paolo Gentiloni, the EU commissioner for the economy, said the upcoming amendment to the Directive on Administrative Cooperation, also known as DAC8, will propose new reporting requirements for all service providers facilitating cryptocurrency transactions for European Union taxpayers.

“The cover of anonymity, the fact that there are more than 9,000 different crypto-assets currently available, and the inherent digital nature of the trade means that many crypto-asset users that are making huge profits fall under the radar of national tax authorities,” Gentiloni stated.

He added that “crypto-asset service providers, irrespective of their size or location, will need to report transactions of clients residing in the EU, whether these transactions are domestic or cross-border.”

Across its legislative agenda, the EU is moving to increase transparency and close loopholes that allow businesses and individuals to hide their assets.

As well as helping to clamp down on tax fraud, increasing transparency is also a key component of the EU’s efforts to tackle money laundering.

Like the Directive on Administrative Cooperation, the EU’s anti-money laundering (AML) framework is also due for an update.

In that endeavor, as PYMNTS has reported, the EU is considering a ban on the use of privacy tokens by regulated financial institutions.

Because untraceable cryptocurrencies like monero and dash can be used to hide the original wallet from which a transaction was sent, they are used to obscure the source of funds.

As such, a privacy coin ban would also have implications for tax evasion as it would be harder for individuals to hide their crypto profits by passing them through anonymous networks before cashing out.

The DAC8 proposal also aims to lose loopholes and enhance cooperation between EU tax authorities by requiring financial institutions to report on e-money and on central bank digital currency (CBDC) transactions, Gentiloni said.

“To ensure that rules are followed, we are setting a common minimum level of penalties for the most serious non-compliant behaviors,” he concluded.

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