 |
Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day’s top stories directly to your inbox. Sign up here! |
(Kitco News) – The Council of the European Union (EU) has formally adopted the latest iteration of the Directive on Administrative Cooperation (DAC8), a cryptocurrency tax reporting rule intended to grant tax collectors the jurisdiction to monitor and evaluate all cryptocurrency transactions carried out by individuals or entities within any other member state of the EU.
DAC8 was formally adopted on Tuesday and will enter into force after it has been published in the Official Journal of the EU. The addition of the number eight indicates that this is the eighth version of the bill. Previous directives dealt with distinct aspects of financial supervision.
The latest iteration of the bill was first proposed in December and was approved by the Council in May following the enactment of the Markets in Crypto-Assets (MiCA) legislation. The measure was passed by lawmakers in the European Parliament in a plenary session on September 13 by a vote of 535 for, 57 against, and 60 abstentions.
DAC8 was crafted to comply with the Crypto-Asset Reporting Framework (CARF), the regulations specified in MiCA, and the amendments to reporting standards published by the Organization for Economic Cooperation and Development (OECD), effectively encompassing all cryptocurrency asset transactions within the European Union.
The bill requires crypto asset service providers (CASPs) to collect information on crypto asset transfers of any amount to ensure traceability and identify suspicious transactions. It was designed to help strengthen the EU’s Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) rules and proposes the creation of a new European AML body.
According to a statement released by the Council, the amendments that were approved “mainly concern the reporting and automatic exchange of information on revenues from transactions in crypto-assets and on advance tax rulings for the wealthiest (high-net-worth) individuals.”
“The aim of the Directive is to strengthen the existing legislative framework by enlarging the scope for registration and reporting obligations and overall administrative cooperation of tax administrations,” they said. “Additional categories of assets and income, such as crypto-assets, will now be covered. There will be a mandatory automatic exchange between tax authorities of information which will have to be provided by reporting crypto-asset service providers.”
The decentralized nature of the cryptocurrency ecosystem has made it difficult for the tax administrations of member states to ensure compliance, the Council said, and the “inherent cross-border nature of crypto-assets requires strong international administrative cooperation to ensure effective tax collection.”
The new directive covers a broad scope of crypto-assets, including those that have been issued in a “decentralized manner,” as well as stablecoins, e-money tokens, and certain non-fungible tokens (NFTs).
The key objectives of this legislation are “to extend the scope of automatic exchange of information under DAC to information that will have to be reported by crypto-asset service providers on transactions (transfer or exchange) of crypto-assets and e-money; to extend the scope of the current rules on exchange of tax-relevant information in order to reduce the risks of tax evasion, tax avoidance and tax fraud, as the current provisions of DAC do not cover this type of income; and to amend a number of other existing provisions of DAC,” the Council said.
“The directive was adopted by member states in the Council, by unanimity,” they said. “It will now be published in the Official Journal and enter into force on the twentieth day following that of its publication.”
Tax collection on crypto-asset transactions has become a point of focus for governments around the world in recent months. Last Wednesday, seven members of the U.S. Senate called on the Treasury Department and the Internal Revenue Service to advance a rule imposing certain tax reporting requirements for crypto brokers “as swiftly as possible.” As it stands currently, the crypto tax reporting requirements that have been approved will not go into effect until 2026 for transactions that occur in 2025.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
