Key Takeaways
- Under DAC8, crypto service providers will be obligated to report transactions involving European Union clients to the tax authorities of EU member states
- The DAC8, or the Eighth Directive on Administrative Cooperation, was initially presented to the EU on December 8, 2022
In a pivotal development, the Council of the European Union formally embraced the eighth iteration of the Directive on Administrative Cooperation (DAC8) on October 17, 2023. This adoption represents a significant stride toward cryptocurrency tax regulation in the European Union.
The DAC8, or the Eighth Directive on Administrative Cooperation, was initially presented to the European Commission on December 8, 2022, and it will come into force following publication in the Official Journal of the EU.
The inception of DAC8 traces back to May 2023 when it received approval after the enactment of the Markets in Crypto-Assets (MiCA) legislation. The inclusion of the number eight in its name signifies its place as the eighth version in a series of directives, each addressing distinct aspects of financial supervision.
Under the scope of DAC8, cryptocurrency service providers will now be obligated to report transactions involving European Union clients to the tax authorities of EU member states. This pivotal step is aimed at streamlining the automatic exchange of cryptocurrency asset information among EU tax authorities.
The European Commission anticipates that implementing this pan-European cryptocurrency asset reporting framework could result in additional tax revenue ranging from €1 billion to €2.4 billion annually. This projection is in line with an impact assessment report by the European Parliamentary Research Service (EPRS).
In its current form, DAC8 is fully aligned with the Crypto-Asset Reporting Framework (CARF) and the stipulations set forth in MiCA, effectively encompassing all cryptocurrency asset transactions within the European Union.
Notably, DAC8 received resounding support in the European Parliament during a vote in September, with 535 members in favor and only 57 opposing. This level of support underscores the European Union’s commitment to bolstering cryptocurrency tax regulations.
DAC8 is slated to take effect on January 1, 2026, allowing ample time for regulatory preparations and the implementation of the Markets in Crypto-Assets (MiCA) regulations.
