The European Commission has announced that it will formally notify twelve countries for their lack of compliance with the EU’s tax reporting rules regarding digital assets. This decision was part of the January infringements package released on a recent Friday. Included in the group of countries that will receive letters of formal notification are Belgium, Bulgaria, Czechia, Estonia, Greece, Spain, Cyprus, Luxembourg, Malta, the Netherlands, Poland, and Portugal. They are requested to fully implement the newly established tax transparency and information exchange regulations concerning crypto assets.

The Commission highlighted that these countries have two months to respond to the notice. Should they fail to comply, they may then receive a more detailed opinion from the Commission.

The directive which governs these tax policies aims to adapt to new market developments and effectively tackle identified tax fraud, evasion, and avoidance through reporting requirements imposed on crypto asset service providers.

Furthermore, Hungary was specifically noted for not adhering to the EU’s Markets in Crypto Assets (MiCA) framework, receiving similar notice to respond within two months. Some service providers in Hungary have had to either suspend or cease certain functions due to recent amendments to local legislation.

While Hungary’s objective is to bolster its anti-money laundering (AML/CFT) practices, the Commission emphasized the necessity for such measures to remain consistent with the MiCA regulations.

MiCA Framework Progress

Since the adoption of MiCA in 2023, its provisions are being implemented in phases, allowing crypto businesses until July 1, 2024, to align with its mandates, although some nations shortened this timeframe.

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