Tax and Technology

S. 6381. Crypto Environments

The purpose of this work is to examine the issues related to tax reporting of the use of blockchain technology in value exchange processes in crypto environments and assess the regulatory framework proposed by the EU Commission. We introduce the key features of the blockchain technology and make a review of its applications in crypto environments. Cryptocurrencies are a widely discussed segment of this ecosystem, but also other innovative applications and organizations within it require due consideration as part of our analysis to assess the impact for tax compliance. Adopting a holistic approach will also enable identifying critical issues not yet addressed in the forthcoming DAC 8 legislation.

1.1. Value and Trust

Unlike the physical world, data and information can be easily duplicated in the digital environment, rendering the concept of “scarcity” obsolete. This is a problem for any data exchanged and/or stored through the internet or any other digital medium. Moreover, these are no longer under our exclusive control. Blockchain offers a solution to this problem by providing a way to store and/or exchange data that are non-replicable, direct, real-time, irrev...