DAC8, a forthcoming European Union (EU) Directive, is set to augment the regulatory landscape for crypto-assets. It is designed to complement the recently introduced Markets in Crypto-assets (MiCA) Regulation and anti-money laundering regulations. Together, these regulations will create the framework for accessing the EU market for crypto-assets, replacing the existing patchwork of national rules governing their issuance, trading and custody.
Additionally, DAC8 encompasses provisions related to the reporting of tax ruling for high-net-worth individuals and introduces minimum penalty levels for non-compliance with the directive.
Background
Tax authorities have struggled to monitor proceeds derived from crypto-assets, which are easily moved across borders. This has hindered their ability to enforce tax payments on crypto-asset transactions effectively. To address this issue, the Organization for Economic Co-operation and Development (OECD) recently introduced the Crypto-Asset Reporting Framework (CARF) and updates to the OECD Common Reporting Standards (CRS). These initiatives extend the principles of the CRS to crypto-assets, providing model rules and commentary for domestic legislation adoption.
DAC8 is the latest addition to the EU Directive on Administrative Co-operation (DAC), aiming to ensure uniform application of crypto-asset reporting rules across the EU. While aligned with the OECD’s CARF, DAC8 includes additional elements beyond CARF’s scope.
The DAC8 proposal incorporates the following elements to enhance Member States’ capabilities in detecting and combatting tax fraud, evasion and avoidance.
- Universal Reporting Requirements.
It mandates all reporting crypto-asset services providers (CASPs) , regardless of size or location, to report transactions involving EU- resident clients, covering both domestic and cross-border transactions. In certain cases, this requirement extends to non-fungible tokens (NFTs).
2. Reporting on E-money and Digital Currencies.
Financial institutions will be required to report on e-money and central bank digital currencies.
3. Advance Cross-Border Rulings.
The scope of the automatic exchange of advance cross-border rulings for high-net-worth individuals will be expanded. This includes individuals holding a minimum of EUR 1million in financial or investable wealth, excluding their primary residence. Member States will exchange information on these rulings issued, amended, or renewed between 1st of January 2020 and 31st of December of 2025.
3. Minimum Penalty Levels.
A common minimum level of penalties will be established for severe non-compliance, such as a complete failure to report despite administrative reminders.
Notably, DAC8 obliges even non-EU service providers to report information when their customers are based in the EU, aiming to eliminate any advantage for these providers in evading reporting obligations by relocating outside the EU. However, given that MiCA regulations mandate crypto-asset service providers serving EU customers to be authorized and established within the EU, DAC8’s non- EU scope primarily pertains to unregulated providers outside the EU, raising questions about its effectiveness in this context.
The draft text will undergo consultation in the European Parliament and adoption in the Council. The new reporting requirements for crypto-assets, e-money and digital currencies are expected to take effect on 1st of January 2026.
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