- Gains from this tax would go toward the European budget
- EC proposed mandatory tax reporting by crypto companies of user funds
European Parliament legislators have proposed taxes on cryptocurrencies to finance the EU’s annual budget of around $185 billion, CoinDesk reported. The options are to tax miners, transactions, and capital gains. They were listed in a draft report for the EP’s budget committee, published last week.
Taxes are less efficient on national level
According to the report, it would be a good idea to introduce a European tax on crypto assets as the gains from this tax would go toward the European budget.
The report was drafted by Portuguese social democrat José Manuel Fernandes and French lawmaker Valérie Hayer. They find that taxing and regulating crypto assets at the EU level would be more efficient than if each country were to do it separately due to their cross-border dimension and high mobility.
EC proposed mandatory reporting
In December last year, the European Commission proposed mandatory reporting by crypto companies of user funds to tax authorities and other new rules to provide information about a crypto investor’s holdings. National governments still determine what and how much to tax.
EP has limited control over tax laws
Other legislators on the committee have just over a week to propose changes to the report. There is a total of 705 lawmakers on the EP, but their control over tax laws is limited. Usually, these laws are agreed by the finance ministers of the EU’s 27 members states acting unanimously.
Addressing the environmental costs
Fabio Panetta, member of the European Central Bank’s board, has stated that the tax revenue could be used to reduce crypto’s environmental costs, particularly those caused by Bitcoin mining, which uses the proof-of-work mechanism.
The legislators are also looking at taxes on carbon-intensive imports, corporate profits, and financial transactions in an attempt to secure funding for the bloc’s budget. Currently, it’s mainly financed through national governments and spent on regional investments and farm subsidies.
