EU Commission Issues Formal Warnings to Dozen Nations Over Crypto Tax Compliance
Hungary also faces scrutiny from the commission for non-compliance with MiCA regulations following changes to domestic legislation.
According to the European Commission, formal notices will be dispatched to a dozen nations that have not fully adopted the European Union's reporting requirements concerning taxation of digital assets.
Within its infringements package issued on Friday for January, the commission—acting as the legislative body of the European Union tasked with both proposing new laws and ensuring compliance with existing regulations among member states—announced that letters of formal notice would be sent to Belgium, Bulgaria, Czechia, Estonia, Greece, Spain, Cyprus, Luxembourg, Malta, the Netherlands, Poland and Portugal "to fully implement the new tax transparency and information exchange rules on crypto-assets."
Referencing directives from the European Union, the commission stated that member states would have a two-month window to provide responses and achieve compliance with the notification, or the commission "may decide to issue a reasoned opinion."
The tax-related directive issued by the commission, which broadened the European Union's regulatory structure for digital assets, mandates that member states "to adapt to new developments of different markets and consequently to effectively tackle identified conducts of tax fraud, tax evasion and tax avoidance" through requirements that crypto asset service providers submit reports containing specific user information and transaction details.
This methodology was better synchronized with the crypto framework established by the Organization for Economic Cooperation and Development (OECD).
Within the identical notice, the commission additionally referenced a letter of formal notice dispatched to Hungarian authorities for non-compliance with the European Union's Markets in Crypto Assets (MiCA) framework, allowing the nation a two-month period for response.
Based on information from the commission, certain crypto asset services providers have either suspended or completely discontinued specific services following an amendment to Hungarian legislation related to "exchange validation services."
"While Hungary aims to strengthen anti money laundering (AML/CFT) safeguards, such measures must remain compatible with MiCA," said the European Commission.
MiCA framework is moving along
Following the passage of MiCA by EU lawmakers in 2023, the requirements targeting token issuers as well as crypto asset service providers have been rolled out in phases to provide companies with adequate opportunities to achieve compliance.
According to the regulatory framework, the majority of crypto companies that were in operation prior to December 2024 have been granted until July 1 at the latest to meet all MiCA requirements or discontinue their service offerings, although certain member states have opted to reduce this compliance timeline.