On Tuesday, members of the The European Parliament (MEP) voted in favor of a resolution that requires the use of blockchain technology to combat tax evasion and urges member states to coordinate more on the taxation of crypto assets.

The resolution, drafted by Lídia Pereira (Member of the European Parliament), was approved in the plenary session of Parliament on Tuesday with 566 votes in favor, 7 votes against and 47 abstentions.

The resolution establishes a framework through which both EU regulators and member states can achieve the goals of uniformly taxing crypto assets and using blockchain in taxation.

However, the proposal calls for both a clear definition of crypto assets and what would constitute a taxable event. Indeed, a taxable event is any action or transaction that may result in taxes owed to the government. However, the recommendation requires that the taxation of crypto assets be fair, transparent and effective. It also invites the authorities to consider a simplified tax treatment for occasional/small traders and small transactions.

As for a taxable event, the proposal considers converting a crypto asset into a fiat currency as a more suitable option. It identifies blockchain as one of the main instruments that national administrations can use to facilitate efficient tax collection.

According to the resolution, the unique features of blockchain could offer a new way to automate tax collection, fight corruption, and better identify ownership of tangible and intangible assets, allowing better taxation of mobile taxpayers.

The proposal calls on EU regulators and member states to better integrate the use of blockchain into different programs dealing with taxation and cooperation in the field. Member states should also enhance efforts to reform their tax authorities through their modernization efforts, the proposal further urged.

In short, as cryptocurrencies gain more mainstream traction, it is no surprise that regulatory efforts are emerging. Regulators such as the EU, IRS, and other agencies today expect taxpayers and businesses to pay regular capital gains taxes on their crypto profits. This implies that the specific regulations on digital assets are rapidly evolving.

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