Patrick Hansen, EU strategy and policy lead at Circle, says the bloc’s cryptocurrency tax revenue outlook could be lower. The European Commission has set aside up to $23 billion during the EU budget cycle from 2028 to 2034.
Hansen argued that a transaction-based cryptocurrency tax would push users toward DeFi protocols. Self-custodial wallets and locations outside the EU would erode the volume of centralized exchange that Brussels expects to have.
What is included in the committee’s proposal?
the It leaked The Commission Services Paper sets out two cryptocurrency tax models that member states should consider:
- A 0.1% tax on the value of cryptocurrency transactions could generate between $3.5 billion and $4.7 billion annually.
Crypto Asset Service Providers (CASPs) will serve as collection and reporting points.
- A separate capital gains tax on realized cryptocurrency profits would raise an estimated $1.2 billion to $2.8 billion annually.
Combined, the two options could generate nearly $23 billion across the EU’s seven-year budget. Officials acknowledge that the numbers depend on market fluctuations.
The paper indicates this Stablecoins used as payments It will likely fall outside the transaction tax.
Taxes on capital gains In general, it does not also apply to dollar-linked tokens, due to their minimal price movement.
Why Hansen thinks forecasts are wrong
Hansen pointed out three structural weaknesses in the modeling:
- Reliable data from DAC8, EU Cryptocurrency Reporting Frameworkit will only arrive from 2027. Early estimates are based on incomplete inputs.
- The proposal also requires unanimous Council approval and a harmonized EU tax base.
France has done its utmost to obtain new sources of income for the European Union. Cryptocurrency tax compliance burdens Resistance from exchange rate-intensive economies such as Malta could exacerbate dissent.
- According to Hansen, behavioral risks loom larger.
Users facing central exchange tax can move activity to Self custody portfolio optionsOr DeFi protocols or platforms outside the EU. Any transaction tax depends on this size.
“Any transaction-based tax on cryptocurrencies would likely accelerate migration towards non-taxable channels… and/or non-taxable assets… and, in practical terms, would significantly reduce the potential revenues on which these projections are based.” male.
Cyprus, which holds the rotating presidency of the council, plans to share its revised budget proposal around June 10.
The result will indicate whether cryptocurrencies will remain on the list, and how they interact with the block MiCA Review Consultation.
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