International Focus
THE REALITY OF CRYPTO-ASSETS: TAX ISSUES AND PROSPECTS WITHIN THE EU
Giacomo Benaglia
Member of ELSA Bologna
As is typically the case with changes and novelties dictated by technology, in recent years the lawmakers and institutions have found themselves more and more often in the position of ‘chasing’ when pursuing an effective definition and potential regulation of such innovations and their very impact on society. A peculiar phenomenon that has gathered great relevance in today’s scenario is the Crypto-assets’ one, with steeply increasing numbers of actors involved, a market capitalisation of more than $2 trillion and more than 200 million users.1 Given the reached magnitude of the industry, this has indeed led numerous world countries to pursue regulations of crypto-related activities from a fiscal standpoint.2 While in constant evolution and characterised by differences and peculiarities we can broadly define crypto-assets as being based, as their name suggests, on cryptography, possessing the intangible nature of essentially computer codes. The peculiarity of the system they are based on, detached from the issuance of a central bank, allows at the same time anonymity and decentralisation, while simultaneously presenting the capacity to conduct 1 Bank of America, ‘BofA Global Research Launches Coverage of Digital Assets’ (4 October 2021) <https://newsroom.bankofamerica. com/content/newsroom/press-releases/2021/10/bofa-global-researchlaunches-coverage-of-digital-assets.html> accessed 17 October 2021 2 Kateryna Solodan, ‘Legal Regulation of Cryptocurrency Taxation in European Countries’, European Journal of Law and Public Administration 2019, Volume 6, Issue 1, pp. 65 < https://doi.org/10.18662/ eljpa/64> accessed 17 October 2021 26 | SYNERGY Magazine
highly secure transactions outside of the participation of banking institutions.3 Notwithstanding a great success and growing diffusion, crypto-assets have raised concerns under several profiles due to their very nature and characteristics, especially with regards to their pseudo-anonymity and global scope, leading to a substantial risk of no reporting of taxable income, tax evasion and revenue loss.4 Focusing on the EU scenario at the present state, the tax treatment of such assets appears to be very differentiated and fragmented from one state to another.5 For example in Germany cryptocurrencies’ gains are subject to income tax limited to the first year of holding rather than capital gain, which is considered a private asset; in Spain on the other hand cryptocurrencies are subject to personal income tax
3 Ibid (n 2) 4 Luisa Scarcella, ‘Exchange of Information on Crypto-Assets at the Dawn of DAC8’, Kluwer International Tax Blog (29 March 2021) <http://kluwertaxblog.com/2021/03/29/exchange-of-information-oncrypto-assets-at-the-dawn-of-dac8/> accessed 17 October 2021 5 Nana Ama Sarfo, ‘The EU’s Cryptoasset Tax Strategy Needs Coordination’ (2 August 2021) <https://www.forbes.com/sites/ taxnotes/2021/08/02/the-eus-cryptoasset-tax-strategy-needscoordination/?sh=636367cb2105> accessed 17 October 2021; Oliver R. Hoor, Marie Bentley, ‘Crypto Assets are Focus of Upcoming Exchange of Information—DAC8’ (15 March 2021) <https://news. bloombergtax.com/daily-tax-report-international/crypto-assets-arefocus-of-upcoming-exchange-of-information-dac8> accessed 17 October 2021
