President Trump recently announced he plans to hold talks with Putin to end the Ukraine conflict. Trump’s recent moves have caught European leaders by surprise, who now fear they could be bypassed in any potential peace talks. Besides the security concerns, the Ukraine conflict has a massive economic impact on Europe. In this article, we will discuss how Trump’s recent moves could impact Europe’s economy including its crypto tax policies and make review of existing EU capital gain tax for individuals. The two most important events of the Munich Conference were the speeches by US Vice President Vance and European Commission President Ursula von der Leyen. And despite all the differences in their positions, both said a lot about EU security spending. In fact the EU will need to pay social benefits in upcoming years, as well as raise defense spending. After a recent informal retreat in Brussels in early February, EU leaders decided they need to invest around 500 billion euros in the next decade for defense. EU Position During the recent Munich conference, European Commission chief Ursula von der Leyen stated that she would propose the activation of an escape clause for the EU’s fiscal rule to boost member defense spending. EU countries collectively spend around 2% of GDP on defense, with the figure rising to 320 billion euros in 2024 compared to 200 billion euros before. Ursula proposed to increase that figure to 3%, which would lead to hundreds of billions more on defense spending, necessitating the change in EU members' economic policy. Several countries have also called for the issuance of Eurobonds to fund increased defense spending. Overall, any increase in defense spending would likely be debt-financed, which would mean a substantial increase in taxes, impacting all financial sectors, including the crypto industry. According to the European Parliament, the EU economic recovery after the 2019 pandemic was negatively impacted by the Ukraine conflict. In 2022 alone, the budgetary impact was an additional 175 billion euros, accounting for around 1.1% to 1.4% of the EU GDP. One of the immediate impacts was a rise in energy prices, which led to increased inflation. To lower the inflation, the ECB began raising interest rates. While there has been some recovery, including rate cuts by the ECB, the EU economy is still in a difficult situation. With Europe planning to increase defense spending, there is a strong chance that higher taxes will be imposed on EU crypto companies and net-worth individuals. Below is a deep dive into existing EU crypto tax landscape. EU Tax Hells for Crypto Here is a short summary of some of the highest crypto taxes in the EU. Netherlands In the Netherlands, there is a 36% tax on the presumed yield from crypto holdings from the previous year. Denmark In Denmark, crypto income is taxed under four levels, which are National income tax at 12.1% to 15%, Municipal tax at 24.982%, Labour market tax at 8%, and Church tax at an average of 0.7%. Combined, the effective tax rate is 37%. Finland Finland has complex crypto tax rules, which includes a 30% tax on all total sales above 1000 euros, and below 30,000 euros. For Any additional sales, you pay a 32.4% tax. Ireland Ireland has 33% сapital gain tax (flat rate). Germany For short-term crypto trading Germany has 45% tax rate. What is the middle level of EU crypto tax? For large European economies, such a tax rate is already in the range between 20-30%. In France there is a 30% capital gains tax on crypto, Italy and Spain have 26% capital gain tax on crypto profits. Also in Austria, it’s 27,5%, Belgium - 25%. EU Crypto Tax Havens Crypto tax regulation for individuals is quite liberal in some EU countries, with the lowest taxes imposed on selling crypto. When it comes to capital tax, four EU countries stand out, but in reality there are many more. Here is brief overview of these tax havens: Cyprus Cyprus, which is traditionally known to be a tax haven, is great for the crypto industry for businesses and individuals. The country offers an option for individual long-term holders to pay 0% tax and 20% for short-term operations. Romania In Romania, there is a temporary tax amnesty for all crypto investments until July 31, 2025. Germany In Germany, there is no capital gains tax for long term holders of crypto. Czech Republic In the Czech Republic, there is no capital gains tax for three-year holders of crypto. Other Jurisdictions Poland with its positive approach to crypto has 19% tax. Greece and Bulgaria have 15% tax rate for individual crypto income. Also Luxembourg and Portugal (1 year holding) exempt long-term holders from capital gain tax. Among European countries, Malta and Andorra also have low capital tax rates. EU Bitcoin Reserve During a press conference on January 30, 2025, ECB president Christine Lagarde nixed the idea of adding Bitcoin to the EU’s reserves. She noted that Bitcoin was too volatile, and had a close association with money laundering. Despite this statement, some EU countries have been considering the idea of adding Bitcoin to their reserves, below are some of them. Norway Norway’s sovereign wealth fund, which manages over $1.5 trillion in funds, has huge indirect Bitcoin exposure. The Norges Bank Investment Management (NBIM) owns over $600 million worth of MicroStrategy shares. Czech Republic While the Czech Republic is not part of the eurozone, it is part of the ECB General Council. The governor of the central bank, Aleš Michl has acknowledged the volatility of Bitcoin while discussing its potential addition to the central bank’s holdings. Recently, the Czech central bank confirmed it had analyzed the addition of new asset classes to its reserve. However, it does not plan to take action until the analysis is complete. The push comes amid the Trump administration’s overtures into creating a Bitcoin reserve. It has clarified that such a reserve would be created from asset seizures, and not from purchases of Bitcoin. Thus far, Texas and Utah have introduced legislation to include Bitcoin in their treasuries. In Utah, a vote was passed in favor, while in Texas, there are two pending bills. \ European central banks will likely add crypto to their holdings in coming months, especially if the Trump administration goes ahead with its plans. However, this will not lead to a drop in the effective tax rate for crypto investors. The increase in the value of crypto due to this move could lead to more taxes as central banks seek to increase their holdings. With Trump seeking to tighten the screws on the trade imbalance between the EU and America, it could deepen the economic difficulties in Europe, leading to new avenues being considered for taxation, including crypto. Besides the US, economic ties with Russia, and China, have worsened, which could translate into increased taxation for EU citizens. The potential outcome would be that crypto investors would move to friendlier countries. Possible Scenario At the same time, high taxes in the above-mentioned EU member countries will be ineffective if tax breaks are maintained and if military spending increases, there is a possibility of unification of the tax policies of the member countries. But even if this does not happen, the main donor countries of the EU military budget will be forced to look for additional sources of income. And raise taxes even more. In this sense, I would call such European countries as Germany, France, Poland, Italy, Spain and Netherlands looking especially risky. Moreover, such measures may be extended to income from capital and financial transactions in general. And this is indeed likely, since governments do not have many sources of income. Even if such measures are introduced gradually, so as not to frighten investors too much, they will still hurt the Eurozone economy. From the point of view of the interests of the European Union, supporting innovation and capital inflow, including the crypto industry, is an absolute benefit for member countries, but in a situation of crisis and increased military spending, the EU countries have less room for choice. President Trump recently announced he plans to hold talks with Putin to end the Ukraine conflict. Trump’s recent moves have caught European leaders by surprise, who now fear they could be bypassed in any potential peace talks. Besides the security concerns, the Ukraine conflict has a massive economic impact on Europe. In this article, we will discuss how Trump’s recent moves could impact Europe’s economy including its crypto tax policies and make review of existing EU capital gain tax for individuals. President Trump recently announced he plans to hold talks with Putin to end the Ukraine conflict. Trump’s recent moves have caught European leaders by surprise, who now fear they could be bypassed in any potential peace talks. Besides the security concerns, the Ukraine conflict has a massive economic impact on Europe. In this article, we will discuss how Trump’s recent moves could impact Europe’s economy including its crypto tax policies and make review of existing EU capital gain tax for individuals. The two most important events of the Munich Conference were the speeches by US Vice President Vance and European Commission President Ursula von der Leyen. And despite all the differences in their positions, both said a lot about EU security spending. In fact the EU will need to pay social benefits in upcoming years, as well as raise defense spending. After a recent informal retreat in Brussels in early February, EU leaders decided they need to invest around 500 billion euros in the next decade for defense. EU Position During the recent Munich conference, European Commission chief Ursula von der Leyen stated that she would propose the activation of an escape clause for the EU’s fiscal rule to boost member defense spending. EU countries collectively spend around 2% of GDP on defense, with the figure rising to 320 billion euros in 2024 compared to 200 billion euros before. Ursula proposed to increase that figure to 3%, which would lead to hundreds of billions more on defense spending, necessitating the change in EU members' economic policy. Several countries have also called for the issuance of Eurobonds to fund increased defense spending. Overall, any increase in defense spending would likely be debt-financed, which would mean a substantial increase in taxes, impacting all financial sectors, including the crypto industry. According to the European Parliament, the EU economic recovery after the 2019 pandemic was negatively impacted by the Ukraine conflict. In 2022 alone, the budgetary impact was an additional 175 billion euros, accounting for around 1.1% to 1.4% of the EU GDP. One of the immediate impacts was a rise in energy prices, which led to increased inflation. To lower the inflation, the ECB began raising interest rates. While there has been some recovery, including rate cuts by the ECB, the EU economy is still in a difficult situation. With Europe planning to increase defense spending, there is a strong chance that higher taxes will be imposed on EU crypto companies and net-worth individuals. Below is a deep dive into existing EU crypto tax landscape. EU Tax Hells for Crypto EU Tax Hells for Crypto Here is a short summary of some of the highest crypto taxes in the EU. Netherlands In the Netherlands, there is a 36% tax on the presumed yield from crypto holdings from the previous year. Denmark In Denmark, crypto income is taxed under four levels, which are National income tax at 12.1% to 15%, Municipal tax at 24.982%, Labour market tax at 8%, and Church tax at an average of 0.7%. Combined, the effective tax rate is 37%. Finland Finland has complex crypto tax rules, which includes a 30% tax on all total sales above 1000 euros, and below 30,000 euros. For Any additional sales, you pay a 32.4% tax. Ireland Ireland has 33% сapital gain tax (flat rate). Germany For short-term crypto trading Germany has 45% tax rate. What is the middle level of EU crypto tax? For large European economies, such a tax rate is already in the range between 20-30%. In France there is a 30% capital gains tax on crypto, Italy and Spain have 26% capital gain tax on crypto profits. Also in Austria, it’s 27,5%, Belgium - 25%. EU Crypto Tax Havens EU Crypto Tax Havens Crypto tax regulation for individuals is quite liberal in some EU countries, with the lowest taxes imposed on selling crypto. When it comes to capital tax, four EU countries stand out, but in reality there are many more. Here is brief overview of these tax havens: Cyprus Cyprus Cyprus, which is traditionally known to be a tax haven, is great for the crypto industry for businesses and individuals. The country offers an option for individual long-term holders to pay 0% tax and 20% for short-term operations. Romania In Romania, there is a temporary tax amnesty for all crypto investments until July 31, 2025. Germany In Germany, there is no capital gains tax for long term holders of crypto. Czech Republic In the Czech Republic, there is no capital gains tax for three-year holders of crypto. Other Jurisdictions Poland with its positive approach to crypto has 19% tax. Greece and Bulgaria have 15% tax rate for individual crypto income. Also Luxembourg and Portugal (1 year holding) exempt long-term holders from capital gain tax. Among European countries, Malta and Andorra also have low capital tax rates. EU Bitcoin Reserve EU Bitcoin Reserve During a press conference on January 30, 2025, ECB president Christine Lagarde nixed the idea of adding Bitcoin to the EU’s reserves. She noted that Bitcoin was too volatile, and had a close association with money laundering. Despite this statement, some EU countries have been considering the idea of adding Bitcoin to their reserves, below are some of them. Norway Norway Norway’s sovereign wealth fund, which manages over $1.5 trillion in funds, has huge indirect Bitcoin exposure. The Norges Bank Investment Management (NBIM) owns over $600 million worth of MicroStrategy shares. Czech Republic Czech Republic While the Czech Republic is not part of the eurozone, it is part of the ECB General Council. The governor of the central bank, Aleš Michl has acknowledged the volatility of Bitcoin while discussing its potential addition to the central bank’s holdings. Recently, the Czech central bank confirmed it had analyzed the addition of new asset classes to its reserve. However, it does not plan to take action until the analysis is complete. The push comes amid the Trump administration’s overtures into creating a Bitcoin reserve. It has clarified that such a reserve would be created from asset seizures, and not from purchases of Bitcoin. Thus far, Texas and Utah have introduced legislation to include Bitcoin in their treasuries. In Utah, a vote was passed in favor, while in Texas, there are two pending bills. \ European central banks will likely add crypto to their holdings in coming months, especially if the Trump administration goes ahead with its plans. However, this will not lead to a drop in the effective tax rate for crypto investors. The increase in the value of crypto due to this move could lead to more taxes as central banks seek to increase their holdings. With Trump seeking to tighten the screws on the trade imbalance between the EU and America, it could deepen the economic difficulties in Europe, leading to new avenues being considered for taxation, including crypto. Besides the US, economic ties with Russia, and China, have worsened, which could translate into increased taxation for EU citizens. The potential outcome would be that crypto investors would move to friendlier countries. Possible Scenario Possible Scenario At the same time, high taxes in the above-mentioned EU member countries will be ineffective if tax breaks are maintained and if military spending increases, there is a possibility of unification of the tax policies of the member countries. But even if this does not happen, the main donor countries of the EU military budget will be forced to look for additional sources of income. And raise taxes even more. In this sense, I would call such European countries as Germany, France, Poland, Italy, Spain and Netherlands looking especially risky. Moreover, such measures may be extended to income from capital and financial transactions in general. And this is indeed likely, since governments do not have many sources of income. Even if such measures are introduced gradually, so as not to frighten investors too much, they will still hurt the Eurozone economy. From the point of view of the interests of the European Union, supporting innovation and capital inflow, including the crypto industry, is an absolute benefit for member countries, but in a situation of crisis and increased military spending, the EU countries have less room for choice.
