IMPORTANT POINTS:
- The European Union is working on a cryptocurrency tax law that could include NFTs and foreign companies operating in the European market.
- This proposal would include an obligation for exchanges to provide information about their customers’ transactions to tax authorities.
- The law seeks to address tax evasion and ensure that investors pay fair taxes.
Law due to be passed next week will force cryptocurrency companies to register with tax authorities, even if they are based outside the bloc or offer non-fungible tokens.
The European Union plans to force cryptocurrency companies to give tax authorities details of their clients’ holdings, according to a draft law posted to CoinDesk under freedom of information laws.
The data-sharing law, based on an Organization for Economic Co-operation and Development (OECD) model, will be approved by finance ministers next week and will allow tax authorities to share data within the 27-nation bloc.
Commission officials say the bill received a unanimous go-ahead at a meeting on Wednesday, though people familiar with the matter told CoinDesk that some finance ministers have yet to receive formal approval from parliaments.
The bill, dated May 5, coincides with proposals put forward by the European Commission in December 2022, as part of an attempt to stop EU residents from hiding cryptocurrency abroad to hide it from the tax authorities. The Commission will have to create a registry of “crypto-asset operators” before December 2025, moving forward one year from the previous deadline, and the rules will apply from January 1, 2026.
Controversially, the law, known as the Eighth Directive on Administrative Cooperation (DAC8), continues to include non-fungible token exchanges that can be used for payments or investments and non-bloc providers with EU customers.
Foreign crypto companies can report to the authorities that they comply with EU rules.
