OECD seeks to ensure crypto assets, and the revenues they generate, are taxed in the world’s largest economies
In 2016 the European Union (EU) adopted the Common Reporting Standards (CRS) framework to provide a centralised exchange of information of taxpayers to help combat tax evasion. Since then, 109 countries have become signatories to CRS reporting, sharing taxpayer information and reducing tax evasion through offshore accounts.
To date, CRS reporting has primarily focused on the exchange of information with respect to foreign financial accounts, with the aim of increasing tax transparency, usually by requiring that banks share relevant information. However, recent reports from the Organisation for Economic Co-operation and Development (OECD) state that reporting requirements will be extended to virtual asset service providers.
This requirement will affect cryptocurrency exchanges, wallets, and other brokers. Exchanges will be required to submit information on the trader, including personal information, account balances, income, transaction levels and other data. Virtual assets will be treated in the same manner as other financial accounts.
In the OECD tax report sent to global finance ministers and central bank governors, the OECD specifically cited COVID-19 and the economic aftermath as a reason to crack down on tax evasion, stating “tolerance for tax evasion and tax avoidance is expected to reach historic lows.”
As such, they propose using the framework and architecture of the CRS as a starting point, using this mechanism to create consistent reporting of crypto assets alongside other financial assets. Data that is collected will be shared by intermediaries with their tax authorities, who with then automatically share it with tax authorities of the jurisdiction in which the taxpayer is resident.
For more information on how this can affect you, contact Alpadis Group