Crypto Compliance and Taxation Outlook of the EU - Espay Exchange

1
(No Transcript)
2
Introduction

• The European Union has managed to contribute at
  least 22 of all economic activity in the globe.
  In 2018, the gross domestic product of the EU
  exceeded 18 trillion. Cryptocurrency investors
  and advocates are watching the EU very closely.
  Any decision that is made by the EU about digital
  currencies will impact the global market as well
  as enterprise adoption of blockchain technology.
  The European Union has been solidly divided on
  the role Europe must play in the digital currency
  and blockchain ecosystem. The state members of
  the EU have their own policies and attitudes
  toward Cryptocurrencies. In this article, we
  cover EU crypto regulations according to the
  regions that come under its territory. We also
  will cover the Crypto taxation outlook of the EU
  countries. Lets get started.

Europe
3
Crypto Compliance Outlook of the EU

• Most of the member states in the EU, token
  trading and ICOs are evaluated on the basis of
  case by case. However, questions of utility VS
  security tokens are still on the way. Issues
  regarding regulating white label Cryptocurrency
  exchange are still in play. In this article, we
  will be covering a few of the member states of
  the EU, reviewing their policies.
• In 2012, the Europe Central Bank managed to
  become one of the first regulatory bodies who
  wrote about Cryptocurrency as an emerging trend.
  The ECB and EU have released new reports, general
  rules about Cryptocurrencies.
• Regulatory in the EU has considered
  Cryptocurrencies as a lawful activity. However,
  they do not consider digital currencies as money
  for traditional means of exchange and commerce.
  Although, Cryptocurrencies are not discouraged or
  prohibited in the EU, the Europe Central Bank has
  not intended to issue a blockchain-based currency
  as a replacement for the euro.
• Exchanges and other service providers are not
  regulated at a regional level. Nonetheless, the
  EU and ECB leave exchange regulation up to the
  judgment of member states. When a Crypto exchange
  receives approval from the national government,
  approval functions as a passport for operation
  around the Eurozone.

4
Crypto Compliance Outlook of the EU

• In 2018, the EU agreed on the text for the Fifth
  Money Laundering Directive. This directive will
  include every Cryptocurrency exchange that put
  forward fiat conversion. As regulated
  institutions under money laundering legislation
  of the EU, crypto exchanges will need to execute
  KYC and CDD (Customer due difference) on every
  exchange user.
• The mixture of regulations and initiatives that
  have been taken by individual member states of
  the EU has made it quite complex for blockchain
  startups to establish themselves in the EU. There
  are seven EU countries that recognized the hidden
  challenges of navigating several regulations.
  These seven EU countries have started an
  initiative, known as Mediterranean Seven.
• The objective of this initiative is to encourage
  the use and development of blockchain technology.
  These EU countries involve France, Spain, Italy,
  Greece, Malta, Portugal, and Cyprus. Now, lets
  discuss the EU states attitudes towards
  Cryptocurrency.

5
France

• Crypto Regulatory Sandbox Only two ordinances on
  blockchain technology have passed the French
  legislature. The first ordinance recognized a
  fine definition of Cryptocurrencies in French law
  as a type of coupon. The second ordinance
  uncovers those hidden potential utilizations
  toward financial instruments, but
  Cryptocurrencies still continue to be mainly
  unregulated in France. Frances markets
  regulator, AMF is considering a
  regulatory sandbox that is meant to study the
  impact of security tokens in the European Union. 
• The government of France has indicated signs
  towards increased regulation and legislation in
  the upcoming years. Bitcoins and cryptocurrencies
  are not legal tenders in the EU. However, the
  ownership of such currencies is legal.
• Trading Ban No
• Banking Ban NO
• Tax Haven Region No 
• Best Place for License No because French
  regulators have recently released strict rules of
  licensing for digital asset service providers.

France
6
Germany

• Crypto Regulatory Sandbox The Germany Federal
  Financial Supervisory Authority (BaFin) has
  undertaken the regulation of Cryptocurrency
  exchanges in Germany. If you are willing to open
  a Cryptocurrency service that trades these
  virtual currencies that are qualify by BaFin, you
  will require approval from BaFin.
• The Germany Federal Financial Supervisory
  Authority makes regulations on ICOs on the basis
  of case by case. It does not include any kind of
  guidelines for what makes a token a security
  versus a virtual currency.
• Trading Ban No
• Banking Ban NO
• Tax Haven Region- Yes, foreign investors do not
  have to bother about the taxes on interest
  burden. Germany retains the privacy of account
  holders. 
• Best Place for License- Germany harshly regulates
  crypto assets. A company seeking to do custody
  for crypto assets is restricted to provide any
  other regulated financial or banking services,
  which requires authorization.

Germany
7
Ireland

• Crypto Regulatory Sandbox Similar to Germany,
  Ireland has ruled to find that Cryptocurrencies
  can either be tradable securities or financial
  instruments. This determination was also based on
  a case by case. Capital gains taxes apply to
  transactions where Cryptocurrency is traded for a
  profit. The finance organizations of Ireland have
  encouraged many initiatives to create Europe-wide
  cryptocurrencies regulation.
• Trading Ban No
• Banking Ban NO
• Tax Haven Region- Yes, Ireland is a host to
  business tax rate of 12.5, and artists relish a
  tax-free income.
• Best Place for License- Yes, Ireland is
  considered as one of the major European markets
  for Cryptocurrency companies.

Ireland
8
Italy

• Crypto Regulatory Sandbox Italy agreed that
  Crypto exchanges are exempt from VAT, and it has
  rulings dating back to 2016 that classify Crypto
  profits as corporate income subject to the
  applicable tax regulations. When a Cryptocurrency
  exchange is willing to function in Italy, they
  will have to follow the similar registration
  process recommended by other European countries.
  The Laws in Italy treats Crypto exchange
  providers in the same ways as other money
  exchange operators do. 
• Trading Ban No
• Banking Ban NO
• Tax Haven Region- No, but Crypto exchanges are
  exempt from VAT
• Best Place for License- Yes, not being regulated
  by any specific law until now, the use or trading
  of Cryptocurrency is not subject to any special
  licensing requirements. You just need to keep
  proper accounting records and also file the
  essential documents with the tax authorities.

Italy
9
Malta

• Crypto Regulatory Sandbox The government of
  Malta has been loudly pro-Cryptocurrency, and
  they consider blockchain as an opportunity to
  bring improvement as well as investment in Malta.
  While the official ruling is not yet on the
  books, it is now expected to be a crypto-friendly
  set of regulations in the EU. The ambition of
  such a ruling would be to craft an understandable
  framework for blockchain startups or White Label
  bitcoin exchange Software development companies,
  and in turn these startups would have access to
  the European market via their Maltese
  headquarters.
• Trading Ban No
• Banking Ban NO
• Tax Haven Region- No
• Best Place for License- Yes

Malta
10
Crypto Taxation Outlook inEuropian Union

• In 2018, the EU agreed on the text for the Fifth
  Money Laundering Directive. This directive will
  include every Cryptocurrency exchange that put
  forward fiat conversion. As regulated
  institutions under money laundering legislation
  of the EU, crypto exchanges will need to execute
  KYC and CDD (Customer due difference) on every
  exchange user.
• The mixture of regulations and initiatives that
  have been taken by individual member states of
  the EU has made it quite complex for blockchain
  startups to establish themselves in the EU. There
  are seven EU countries that recognized the hidden
  challenges of navigating several regulations.
  These seven EU countries have started an
  initiative, known as Mediterranean Seven.
• The objective of this initiative is to encourage
  the use and development of blockchain technology.
  These EU countries involve France, Spain, Italy,
  Greece, Malta, Portugal, and Cyprus. Now, lets
  discuss the EU states attitudes towards
  Cryptocurrency.

11
France

• For companies, cryptocurrencies profits are
  prone to tax under the general corporation tax
  regime for losses and profits.  Currently,
  corporate income tax is levied at the 33.33
  rate. The standard rate is assumed to be
  gradually reduced to 25 in 2022. Profits from
  Cryptocurrency mining and speculation are treated
  as commercial and industrial profits subject to
  the ongoing income tax schedule.
• According to the French Supreme Court,
  Cryptocurrency assets that are associated for tax
  purposes to intangible assets, their VAT
  treatment should look similar to the following
  aspects
• When Cryptocurrency is exchanged for fiat
  currencies, no VAT is due on the Cryptocurrencys
  value and in respect of the fees. If there is any
  VAT, it will be charged by the intermediary. 
• Revenue that is received from Cryptocurrency
  mining activities is subject to VAT as a supply
  of goods or services.
• Acquisition of services or goods through
  Cryptocurrency payments are also subject to
  French VAT.

France
12
Germany

• In Germany, the tax treatment is not completely
  settled by the regulation. Profits will be
  taxable as current income, capital gains, or not
  at all. Cryptocurrencies will be regarded as an
  asset for the purposes of tax. The scope of
  taxation will depend on whether the
  Cryptocurrency is held as business or private
  asset.  However, companies are treated as holding
  assets as business assets. If anyone has held
  them as business assets, all profits will be
  subject to tax. If anyone has held them as a
  private asset, then profits from lending are
  taxable as income. Payments made in
  cryptocurrencies are treated as a Cryptocurrency
  sale and lead to the tax outcomes.
  Cryptocurrencies mining is subject to tax as a
  business income based on different
  circumstances. 
• VAT treatment in Germany has issued on the
  following guidelines
• Generally, revenue obtained from Cryptocurrency
  mining tasks is outside the scope of VAT.
• Revenue obtained for the provision of wallets for
  which certain charges are made is subject to
  VAT. 
• When cryptocurrencies are exchanges for fiat
  currencies, the Cryptocurrency transfer is exempt
  from VAT. 
• Charges for the provision of a platform to sell
  and buy in cryptocurrencies are considered a
  technical service subject to VAT.

Germany
13
Italy

• The Italian Tax Authority has provided some
  specific guidelines to understand Cryptocurrency
  taxation (direct taxes and VAT) outlook of Italy.
  A few of them are given below
• Any individual, who is occupied in speculative
  activities, will be taxed at 26.
• Traders in the cryptocurrency industry are
  subject to tax on profits as income. This will
  also involve non-residents trading via a
  permanent establishment in Italy.
• For those companies that are subject to
  corporation tax, the losses or profits on
  exchange movements among cryptocurrencies are
  taxable.
• If you want to pay in Cryptocurrency for any
  service or good, the value of the supply on which
  VAT is due will be the Euro value of the
  Cryptocurrency at the moment the transaction
  takes place.
• The sale and purchase of Cryptocurrency in an
  exchange for Euros are considered as a foreign
  currency transaction. And that transaction margin
  is exempt from VAT.

Italy
14
Spain

• If any individual has held Cryptocurrency as an
  investment, the Cryptocurrency will be considered
  as an asset for capital profits tax. The capital
  profit is charged when the Cryptocurrency is
  handed over by the individual who is paying tax.
  For companies that are subject to corporate tax,
  losses, or profits derived from exchange
  activities among crypto and other kinds of
  currencies are taxable.
• Revenue obtained from Cryptocurrency mining
  movements is outside the scope of VAT. Charges
  made over the value of the Cryptocurrency for
  sorting or carrying out any Cryptocurrency
  transactions are exempt from VAT.

Spain
15
Final Thoughts

• The European Union is the second-largest economy
  across the globe. It is right behind famous Asian
  countries like South Korea and Japan in terms of
  Cryptocurrency investment. The future of
  Cryptocurrency in the EU depends on shared
  regulations and clean frameworks for blockchain
  businesses moving ahead. If you want to invest
  in centralized trading solutions or centralized
  exchange platform, you must have a good
  understanding of legal compliance and taxation
  outlook of the EU.

16
Thank You
hello_at_espay.exchange
espay
Espay Exchange
Espayexchange