Crypto asset service providers should report their clients’ transactions as part of the European Union’s Digital Finance Package proposal, known as DAC8.
As part of its effort to tighten regulations on cryptocurrency and make them more comparable to traditional financial services, the E.U. is taking this step.
The DAC8 amendment
To combat tax evasion through digital assets, the commission’s proposal, unveiled in December, requires companies with E.U. clients to register in the bloc and report digital assets, including crypto and some non-fungible tokens (NFTs), to tax authorities, aligning with similar moves by the Organisation for Economic Cooperation and Development (OECD). Benjamin Angel, the director of the commission’s tax department, tweeted about the DAC8 proposal, which was submitted in December 2020 and recently won backing from EU ambassadors. This remark was made in connection to the usual meeting of economic and finance ministers scheduled for May 16 in Belgium.
You might also be interested in: EY has launched a carbon emission tracking software based on Ethereum. The European Union’s proposed DAC8, which requires crypto asset service providers to report client transactions in order to combat tax-related crimes, has received support from ambassadors and could be implemented before the Crypto-Asset Reporting Framework (CARF) in early 2026, pending approval from the Council of Economic and Financial Affairs.
An attempt to curb tax evasion
Last year, in an effort to curb tax fraud via cryptocurrencies, the European Commission proposed an eighth amendment to the Directive on Administrative Cooperation (DAC8), which enlarged an existing regulation aimed at prohibiting taxpayers from concealing taxable assets in offshore bank accounts. The proposal was vulnerable to veto by any of the EU’s 27 member countries that comprise the E.U. Council. The council debated the bill behind closed doors, and a draught of the agreed-upon wording has yet to be published.
The latest news, however, indicates that the new rules permitting tax authorities to share data about traders’ crypto holdings have been universally endorsed by E.U. member states, indicating that formal agreement on the law is likely to be reached shortly.