Common Reporting Standard amendments
Along with the introduction of CARF, some amendments to the CRS have been decided. These amendments bring within the CRS scope certain e-money products and Central Bank Digital Currencies. These updates will also ensure that indirect investments in crypto-assets through derivatives are covered by the CRS.
The DAC8
To allow its Member States to implement CARF rules, the Council of the European Union formally adopted on 17th October 2023 this directive amending EU rules on administrative cooperation in the area of taxation. Referred to as “DAC8”, this is a new update to the DAC, which aims to strengthen the existing legislative framework by enlarging the scope for registration and reporting obligations. This latest version of the directive applies to all service providers that facilitate transactions in crypto-assets for EU customers. DAC8 includes provisions on reporting and exchanging information related to crypto-assets for direct tax purposes. This directive is aligned with the OECD’s CARF and incorporates the amendments to the CRS. The Commission also builds on the definitions used in Market in Crypto-assets Regulation (“MiCA”) for service providers and crypto-assets, which provides the conditions for accessing the EU crypto-asset market and anti-money laundering rules.
Member States should transpose DAC8 into their national law by 31 December 2025.
DAC8 rules would follow a three-step approach similar to that of DAC7:
Step 1: Conduct due diligence procedures that identify reportable users, i.e., those who use the service provider to trade and exchange their crypto-assets. The identification of such reportable users would be conducted through self-certification.
Step 2: Collect and report information to the relevant competent authority no later than 31 January of the following calendar year. Reporting CASP would have to inform each relevant individual that their personal information will be collected and reported, adhering to GDPR policies.
Step 3: The competent authority of the Member State that has received the information from the reporting crypto-asset service provider must communicate it to the competent authority via a mandatory automatic electronic exchange of information.
