In order to establish the fairest possible taxation for DeFi and cryptocurrency staking, the United Kingdom is calling for evidence. Investors and professionals in the sector are therefore invited to express their views, until August 31, with the aim of optimizing the current tax system.
UK wants relevant taxation for DeFi and staking
Hear Majesty’s Revenue and Customs (HMRC), the British tax authority, wants to establish relevant taxation for decentralized finance (Challenge) and the staking of cryptocurrencies. Regarding DeFi, it is more precisely the activities liquidity lending and borrowing.
To carry out this mission, HMRC has launched a call for testimonies. The various players concerned, whether professional or private, are therefore invited to answer a series of questions until August 31.
Thus, the British government hopes to propose taxation as fair as possible :
“In particular, the government wishes to consider whether administrative burdens and costs could be reduced for taxpayers who engage in this activity, and whether the tax treatment can be better aligned with the underlying economics of the transactions concerned. »
These are 11 questions that are asked, in order to question and improve the current model.
As a first step, HMRC would like to establish a census of the population concerned, from different angles. This will include identifying British professionals operating in this branch, as well as investors interacting with these platforms, whether or not they are residents of the United Kingdom. Of course, these taxes will not concern that British citizens.
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A wise choice
In its press release, HMRC shows humility. The government recognizes that the current rules may not be optimal and that is the whole purpose of this consultation. For example, question number 2 clearly asks whether or not the country is competitive for our ecosystem:
“Bearing in mind that UK individuals are subject to the same tax treatment for DeFi lending and staking, where are the platforms they use? Does the current tax treatment make the UK less attractive for platforms as a place of business? If so, which jurisdictions are preferred and why? »
Due to the diversity of the operations it offers, DeFi brings many tax questions. Thus, the government wants to know if it is appropriate to follow the rules of traditional finance or if it is appropriate to create new ones.
The whole point is to do not create injustice between different classes of similar assets. The goal is not to favor one over the other. We can illustrate this with a controversial point of the French model: declaring losses on the sale of cryptocurrencies does not generate tax relief, while it is the case with shares. These are precisely disparities like this which HMRC seeks to avoid.
For the moment, there is no question of any decision, only of consultations. However, a good number of political authorities would benefit from take the UK as an example on this point. Indeed, there is nothing more judicious to regulate an ecosystem than to seek the opinion of those whose expertise it is.
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Source: UK Government
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