Compliance Insight Weekly Update #3

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On December 8th, the European Commission proposed new tax transparency rules for all crypto service providers with customers residing in the European Union.

Given that crypto assets can be traded across borders and proceeds stemming from such activities are not visible to tax authorities under the current regime, this decision comes as a solution to enlarge tax authorities’ visibility of EU residents’ crypto activities with the scope of detecting and countering tax fraud, tax evasion and tax avoidance.

To this respect, all crypto-asset service providers,” irrespective of their size or location”, are to report transactions of EU residents.

„Moreover, the Commission suggested extending both reporting obligations of financial institutions to cover e-money and digital currencies and the scope of the automatic exchange of information to advance cross-border rulings used by high net-worth individuals.”

Under the amended Directive on Administrative Cooperation (DAC), penalties for serious non-compliance (i.e. no reporting even after administrative reminders are issued) are to be implemented.

These draft decisions have been proposed in line with OECD’s Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard and are to be submitted to the European Parliament for consultation and to the Council for adoption. If approved “the new reporting requirements with regard to crypto-assets, e-money and digital currencies would enter into force on 1 January 2026.