For Europeans, paying taxes on crypto is about to get a whole lot easier. The European Union (EU) is cooking up some of the hottest crypto news of the day with word that it has approved a simplified structure for crypto taxes. The provision will make things much more streamlined, especially for retail traders conducting small transactions. Plus, it sets a precedent for crypto-focused nations outside of the EU who are developing their own crypto policies, like the U.S.
Earlier in the year, the EU made a splash as it passed the Markets in Crypto Assets (MiCA) package. This set of regulations is making for the most robust crypto infrastructure for any nation in the world thus far. Once codified and in effect, it will ensure European crypto investors remain safe while being careful not to snuff out innovation within the space.
The conglomerate of European nations isn’t finished just yet. The European Parliament, one of seven EU institutions, just voted in favor of a resolution made to both strengthen a fight against blockchain-fueled tax evasion while hoping to make payments more easy and convenient for investors.
Specifically, the resolution will task member states with considering simplified tax structures for retail investors who only trade occasionally or make small transactions. These states should also look to blockchain technology for tax collection purposes, rather than simply for monitoring evasion of taxes. If adopted on an EU-wide scale, the resolution will make paying taxes potentially as easy as sending a lump sum in a blockchain transaction.
Crypto News: Taxpayer Friendly EU Resolution Contrasts With U.S.
The crypto news out of the European Union might surprise American investors. Sure, the EU is fairly ahead of the curve with its crypto regulations; MiCA comes months and maybe even years before the U.S. will roll out anything substantive on digital assets. But this resolution in particular stands in stark contrast to America’s handling of crypto taxes.
While the EU looks to better the taxpaying experience for European citizens, lawmakers in the U.S. could take notice. As it stands right now, the resources available for crypto investors in the States remain few and far between, and tax regulations on crypto are foggy at best and downright confusing at worst.
Keeping in line with the Securities & Exchange Commission’s hyper-aggressive regulating habits, the Internal Revenue Service, or IRS, is starting to drop the hammer on investors who aren’t properly paying taxes on their crypto. Unlike the EU, U.S. lawmakers have been putting off producing any sort of regulatory clarity or infrastructure for reporting crypto holdings.
This lack of clarity is allowing the IRS to use John Doe summonses with increasing frequency. The agency uses these to subpoena users of different crypto services in order to investigate large swaths of people who they have reason to believe didn’t properly report holdings.
These summonses don’t discriminate between purposeful tax evaders and retail investors who simply don’t know their way around a nascent and complicated investment class. Hopefully, American agencies take note of the new resolution as they do other crypto legislation abroad.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
