DAC8 provides for automatic exchange of information on crypto-assets between EU countries. It is the eighth amendment of the Directive on Administrative Cooperation in Direct Taxation.
The Directive aims to strengthen the overall legal framework on the automatic exchange of information (AEOI) to fight tax fraud and combat tax evasion and tax avoidance by enlarging its scope to cover crypto-assets.
Rationale
The decentralised nature of crypto-assets has made it difficult for EU countries’ tax administrations to ensure tax compliance. The inherent cross-border nature of crypto-assets requires strong international administrative cooperation to ensure effective tax assessment and collection of the related income and capital gains.
The Directive lays down the rules and procedures for exchanging information on crypto-asset users by implementing due diligence procedures and reporting rules for operators active in crypto-asset transactions and their users. The rules are based on the OECD's international standard Crypto-Asset Reporting Framework (CARF).
Background
The directive was adopted by EU countries on 17 October 2023 and published in the Official Journal of 24 October. EU countries will have to transpose it by 31 December 2025 and must apply its provisions as of 1 January 2026. The first reporting year is 2026.
The crypto-asset market has grown in importance as it provides a variety of new business opportunities, including those for innovation and investment. Nevertheless, the growth in the use of crypto-assets should not be at the expense of transparency for tax purposes.
The decentralised nature of crypto-assets makes it difficult for EU countries’ tax administrations to ensure compliance with the rules and guidance they have put in place to tax income and gains derived from crypto-asset transactions.
The directive requires EU countries to obtain information from the Reporting Crypto-Asset Service Providers (RCASPs) and exchange that information with the EU country of residence of the taxpayer/investor on an annual basis.
Reporting
RCASPs are required to collect information pertaining to transactions of their non-resident investors for the reporting year according to the customer due-diligence obligations of the directive.
This information is sent by RCAS to their national tax authorities in the calendar year following the reporting year. The information is then exchanged with tax authorities of the EU country of residence of the non-resident investor within 9 months of the reporting year. Therefore, the exchanges relating to the first reporting year will take place by 30 September 2027.
Scope
This directive covers a broad scope of crypto-assets, building on the definitions set out in the European Crypto-Assets Regulation (MiCA).
In addition, crypto-assets that have been issued in a decentralised manner, as well as stablecoins, including e-money tokens and certain non-fungible tokens (NFTs), are included within the scope of the directive.
RCASPs, which include both individuals and entities that provide services effectuating exchange transactions in relevant crypto-assets, are best placed to collect and verify the necessary information on their users. This covers both cross-border and domestic transactions and aims to ensure the effectiveness of the reporting rules, the proper functioning of the internal market, a level playing field, and respect for the principles of non-discrimination.
The directive sets out the information to be reported and exchanged, including the identification requirements of both the RCASP and the taxpayer/investor.
To enable tax administrations to analyse and use the information, the information is subdivided in relation to each reportable crypto-asset and includes quantitative information such as the aggregate gross amount paid or received in respect of acquisitions or disposals against Fiat or other reportable crypto-assets, or the aggregate fair market value, in case of transfers.
In addition to information on crypto-assets, the directive also requires information to be automatically exchanged between EU countries for the following categories:
- Non-custodial dividend income other than income from dividends exempt from corporate income tax pursuant to Articles 4, 5 or 6 of Council Directive 2011/96/EU (the ‘Parent-Subsidiary Directive’)
- Rulings – the amount of the transaction or series of transactions of the advance cross-border ruling exceeds EUR 1 500 000 (or the equivalent amount in any other currency), if such amount is referred to in the advance cross-border ruling; or the advance cross-border ruling which determines whether a person is or is not resident for tax purposes in the EU country issuing the ruling
International impact
To address the risks posed by crypto-assets with respect to tax transparency, the OECD, in collaboration with G20 countries, completed and published the crypto-asset reporting framework (CARF) in July 2013. This framework provides for the reporting and automatic exchange of information (AEOI) related to crypto-assets between tax authorities for tax compliance purposes.
G20 leaders immediately welcomed the development and invited the Global Forum on Transparency and Exchange of Information for Tax Purposes to support the rapid and widespread implementation of the CARF.
As of July 2024, 58 Global Forum members (and growing) have already announced their intention to commence exchanges under CARF in 2027. This means that the automatic exchange of information on crypto-assets will combat tax evasion and tax avoidance on a global level.
Legal texts
Council Directive (EU) 2023/2226 of 17 October 2023 amending Directive 2011/16/EU on administrative cooperation in the field of taxation