The European Parliament Approves DAC8: New Tax Reporting Requirements for Crypto Transactions

The European Parliament Approves DAC8: New Tax Reporting Requirements for Crypto Transactions

The European Parliament has made a significant decision by approving DAC8, a measure that mandates tax reporting requirements for cryptocurrency transactions throughout the European Union (EU). This new rule marks an important step in regulating the crypto market and ensuring that crypto-asset service providers comply with tax obligations. With a vote of 535 in favor, 57 against, and 60 abstentions, the DAC8 rule has surpassed its final legislative obstacle and is on its way to becoming law.

Once implemented, the DAC8 will facilitate the automatic exchange of information on crypto assets among tax authorities in EU countries. The goal is to improve transparency and combat tax evasion in the crypto space. The European Commission estimates that this EU-wide crypto-asset reporting framework could generate an annual additional tax revenue of €1 to €2.4 billion. These funds could contribute to various public initiatives and services across the EU.

The DAC8 directive closely aligns with the provisions of the OECD’s Common Reporting Standard (CRS). It defines two types of entities that are required to report information to local authorities: crypto-asset providers and crypto-asset operators. Crypto-asset providers offer one or more crypto-asset services to third parties, while crypto-asset operators provide crypto-asset services other than being a provider. Both these entities fall under the category of reportable crypto-asset service providers (RCASPs) and must comply with the DAC’s reporting requirements if they have reportable users within the EU, regardless of their size or location.

The DAC8 directive covers all types of crypto assets that can be used for investment and payment purposes. This includes cryptocurrencies and tokens, as well as e-money, e-money tokens, and central bank digital currencies (CBDCs). Reportable transactions by RCASPs encompass exchange transactions and transfers of reportable crypto-assets, including conversions between crypto-assets and fiat currencies, as well as transfers between different crypto-assets.

According to the European Parliamentary Research Service (EPRS) report, the reporting arrangements are scheduled to commence on January 1, 2026. This provides ample time for the Markets in Crypto-Assets (MiCA) regulation to be fully implemented and operational. The introduction of DAC8 will have a profound impact on the crypto industry, encouraging greater transparency and accountability, ultimately fostering investor confidence and regulatory stability in the EU.

The European Parliament’s approval of DAC8 signifies a milestone in the regulation of crypto transactions in the EU. By introducing tax reporting requirements for crypto-asset service providers, the EU aims to combat tax evasion and establish a more transparent and accountable crypto market. The DAC8 directive aligns with international standards and sets the stage for the automatic exchange of information among tax authorities. As the crypto industry continues to evolve, it is crucial for regulators to keep pace with technological advancements and ensure that appropriate measures are in place to protect investors and maintain the integrity of the financial system.

Regulation

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