EU Crypto Tax Revenue Forecast Faces Skepticism, Circle Executive Warns

The European Union’s projected crypto tax revenue could fall well below expectations, according to Patrick Hansen, Circle’s EU Strategy and Policy Lead. Hansen has challenged the European Commission’s estimate that new cryptocurrency taxes could generate nearly $23 billion during the EU’s 2028–2034 budget cycle.

A leaked European Commission document outlines two proposed crypto taxation models that member states may consider. The first is a 0.1% tax on cryptocurrency transactions, which officials believe could generate between $3.5 billion and $4.7 billion annually. Under this framework, crypto-asset service providers (CASPs), including centralized exchanges, would be responsible for collecting and reporting the tax.

The second proposal focuses on capital gains tax for realized cryptocurrency profits. According to the Commission’s projections, this measure could raise between $1.2 billion and $2.8 billion each year. Combined, both initiatives could contribute close to $23 billion over the seven-year EU budget period, although officials acknowledge that market volatility could significantly impact actual revenue.

The proposal reportedly exempts stablecoins used for payments from the transaction levy. Dollar-pegged stablecoins would also likely avoid capital gains taxation due to their relatively stable value.

Despite these projections, Hansen believes the estimates overlook several critical challenges. He noted that reliable data from DAC8, the EU’s crypto reporting framework, will not become available until 2027, meaning current forecasts rely on incomplete information. He also highlighted the political hurdles involved, including the need for unanimous approval among EU member states and agreement on a harmonized tax framework.

Another concern is user behavior. Hansen argues that a transaction-based crypto tax could encourage investors and traders to shift activity away from centralized exchanges toward decentralized finance (DeFi) platforms, self-custody wallets, and non-EU crypto services. Such migration could significantly reduce the taxable transaction volume that the EU expects to capture.

As Cyprus prepares to present a revised EU budget proposal around June 10, the future of cryptocurrency taxation in Europe remains uncertain. The decision could also influence upcoming discussions surrounding the European Union’s Markets in Crypto-Assets (MiCA) regulatory framework and broader digital asset policies.