The European Parliament has approved new regulations known as DAC8 that impose reporting requirements on cryptocurrency transactions. The legislation aims to combat tax evasion and increase transparency in the crypto industry. The approval came with a significant majority, with ten votes in favor for every one against. The move is expected to have a major impact on the cryptocurrency market in Europe and could serve as a model for other regions looking to regulate the sector.
European Parliament Approves DAC8: A New Tax Reporting Measure for Crypto Transactions
The European Parliament has officially approved DAC8, a new measure that mandates tax reporting requirements for cryptocurrency transactions within the European Union (EU). With an overwhelming majority, the proposed rule has successfully cleared its final legislative hurdle and is on course to become law.
The DAC8 Rule and its Objectives
The DAC8 rule, designed as an amendment to the EU Directive on Administrative Cooperation (DAC), aims to enforce crypto-asset service providers to report transactions involving EU clients to the tax authorities of the member countries. By implementing DAC8, the European Union intends to enable the automatic exchange of information on crypto assets among its tax authorities.
This new reporting framework holds great potential for the EU in terms of generating additional tax revenue. According to an impact assessment report by the European Parliamentary Research Service (EPRS), the European Commission estimates that DAC8 could yield between €1 and €2.4 billion in annual tax revenue.
Obligations for Crypto-Asset Providers and Operators
The EPRS report provides comprehensive details on the DAC8 directive, highlighting its close alignment with the provisions of the OECD’s Common Reporting Standard (CRS). The directive outlines two categories of entities that must report information to local authorities:
1. Crypto-Asset Providers: These are entities that offer one or more services related to crypto-assets to third parties.
2. Crypto-Asset Operators: These entities provide crypto-asset services other than those offered by crypto-asset providers.
Both these categories of entities, known collectively as reportable crypto-asset service providers (RCASPs), will be subject to DAC’s reporting requirements if they have reportable users within the EU, irrespective of their size or location.
The DAC8 directive covers all crypto-assets that can be utilized for investment and payment purposes. Additionally, it includes e-money, e-money tokens, and central bank digital currencies (CBDCs) within its scope. Reportable transactions for RCASPs include exchange transactions and transfers of reportable crypto-assets, including transactions involving fiat currencies and transactions between different reportable crypto-assets.
The reporting arrangements outlined in the EPRS report are expected to take effect from January 1, 2026, providing ample time for the implementation of the MiCA regulation, as mentioned in a CryptoSlate article.
In conclusion, with the approval of DAC8 by the European Parliament, the EU is taking a significant step towards regulating and ensuring transparency in cryptocurrency transactions. The implementation of this new tax reporting measure will facilitate the exchange of information among EU member states and potentially result in substantial tax revenue gains for the European Union.