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The inherent ambiguity associated with crypto-assets has presented numerous regulatory and administrative challenges to governments, businesses and individuals across the globe. From the perspective of tax authorities, there is a deficit in terms of information available in respect of crypto-assets and this may be resulting in a loss of tax revenue.
In order to combat this potential loss, the European Union (EU) has introduced new rules to enhance tax compliance in the digital economy as well as updated parts of the Directive in Administrative Co-operation (DAC) in order to improve tax transparency amongst EU Member States.
DAC8 enters into force on 13 November 2023 and for the most part will come into effect for all EU Member States from 1 January 2026. Member States will have until 31 December 2025 to transpose DAC8 into national domestic law.
The primary function of DAC8 is to introduce a common set of mandatory reporting obligations for reportable (crypto) transactions within the EU. Such reporting standards will closely mirror the Organisation for Economic Co-operation and Development’s (OECD’s) Crypto-Asset Reporting Framework. These reporting obligations are in conjunction with the MiCA regulation, which introduced a dedicated regulatory framework for crypto-asset service providers who provide services in the EU market.
It is important to note that while DAC8 introduces a new mandatory reporting regime, it does not impact how crypto-assets are taxed in EU Member States.
RCASPs will be required to fulfil the obligation of reporting certain information to the tax authorities in the Member State in which they are registered. RCASPs will effectively need to report details of all acquisitions and disposals of crypto-assets by persons resident in any EU Member State.
This will be an annual reporting requirement with the first report for the calendar year 2026 expected to be due within 9 months of the year-end (i.e. by 30 September 2027).
All such reports will need to be made under a fiat currency as there is no option for submitting reports under any crypto-currencies.
In addition to reporting obligations, RCASPs will also be obliged to apply certain due diligence procedures in respect of customers and retain certain information on file in respect of customers. Where a customer does not provide the requested information within 60 days after two reminders following the initial request, the RCASP will be obliged to cease transactions on the customer’s account.
Despite sharing certain similarities with crypto-products, e-money and central bank digital currencies will not be subject to the DAC8 reporting regime. Instead, they will be subject to the existing financial services reporting requirements under the CRS.
An RCASP that facilitates transactions in crypto-assets and e-money/ central bank digital currencies will therefore be subject to both DAC8 and DAC2 reporting obligations.
It had been proposed to harmonise penalties for non-compliance with various DAC reporting obligations (DAC2, DAC4, DAC6, etc.) across the EU. Instead, DAC8 ultimately leaves the decision on penalties to the individual Member States, while stating that any penalties provided for should be “effective, proportionate and dissuasive.”
The automatic exchange of advance cross-border rulings is extended to natural born persons in cases where:
This provision is applicable to advance cross-border rulings that are issued, amended or renewed after 1 January 2026.
Grant Thornton can assist in implementing effective processes to ensure DAC8 risks are identified and managed accordingly as follows:
