- The regulations mandate crypto service providers in the EU to collect, verify, and report user data to national tax authorities.
- However, it does not directly affect crypto owners, who are already required to declare their crypto holdings in tax returns.
Cryptocurrency service providers in the European Union (EU) will soon face new obligations that aim to bring more transparency to the sector. Beginning January 1, 2026, these providers will be required to collect, verify, and report data about their users to national tax authorities, the Netherlands Ministry of Finance reported.
This step aims to close the loopholes that have allowed tax evasion and avoidance in the fast-growing crypto market. The rise of cryptocurrencies has introduced a new challenge for tax authorities across the EU.
Just like traditional forms of capital, bank accounts, stocks, or bonds, cryptos are subject to taxation. However, the existing framework hasn’t fully kept up with this market. As a result, many tax authorities still lack a clear view of crypto holdings, creating an uneven playing field in the financial system.
Under the upcoming legislation, which is based on the European DAC8 directive, crypto providers will play a crucial role in ensuring greater transparency. They will be required to report user data to the relevant tax authorities, who will, in turn, exchange this information across EU member states.
This system reduces the reporting burden on crypto providers, as they only need to report to the tax authority in their country of registration rather than each member state.
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Internet Consultation And Stakeholders’ Feedback
To ensure the effectiveness of this new bill, the Dutch Cabinet has opened an internet consultation to gather feedback from stakeholders. This consultation, running from October 24 to November 21, allows interested parties to share their opinions, concerns, or suggestions.
According to the Cabinet, input from crypto companies, tax experts, and other stakeholders is vital to shaping a well-rounded and effective law before it reaches the House of Representatives.
The bill is expected to be submitted in the second quarter of 2025, and the new reporting requirements will take effect at the beginning of 2026. Despite the significant change for service providers, crypto owners themselves won’t see a direct impact. They are already obligated to declare their crypto holdings in their tax returns.
At the heart of this legislative push is the desire to create a level playing field in the financial markets. Traditional institutions like banks and investment funds already face stringent reporting obligations. By extending similar responsibilities to crypto service providers, the EU aims to ensure that cryptocurrency assets are not used as a vehicle for tax evasion.
