The European Council has approved updated rules that expand tax reporting requirements to include transfers of crypto assets. This is the eighth version of the Directive on Administrative Cooperation (DAC), which is a set of procedures for the automatic exchange of information between European governments for tax purposes.
DAC8 was proposed in December and approved on May 16 after approval of Markets in Cryptoactives (MiCA) since it depends on definitions established in said legislation. The new DAC adheres to the Crypto Asset Reporting Framework (CARF) and amendments to published reporting standards by the Organization for Economic Co-operation and Development (OECD) in October under a G20 mandate.
Related: What's next for the EU crypto industry when the European Parliament approves MiCA?
DAC8 requires crypto asset service providers (CASPs) to collect information on crypto asset transfers of any amount to ensure traceability and identify suspicious transactions. It reinforces the rules against money laundering and terrorist financing (AML/CFT) of the European Union and proposes the creation of a new European AML body. The proposed regulation requires that the CASPs:
โEnsure that crypto asset transfers are accompanied by the name of the beneficiary, the distributed ledger address of the beneficiary, in cases where a crypto asset transfer is recorded on a network using DLT or similar technology, [and] the beneficiary's account number, in cases where such an account exists.โ
The proposed regulation further explains: โInformation must be sent securely and before, or concurrently with, or at the same time, the transfer of crypto assets.โ
In addition to the new requirements for CASPs, DAC8 includes new reporting rules related to high-income individuals and more stringent requirements for reporting tax identification numbers.
We welcome the political agreement reached today by the EU Finance Ministers on the new rules of fiscal transparency in the crypto-assets sector.
The Directive will improve the ability of EU countries to detect and combat tax fraud, tax evasion and avoidance.
More information โ
โ European Commission (@EU_Commission) May 16, 2023
Swedish Finance Minister Elisabeth Svantesson saying in a sentence:
โToday's decision is bad news for those who have misused crypto assets for their illegal activities, to circumvent EU sanctions, or to finance terrorism and war. Doing so will no longer be possible in Europe without exposure.โ
Changes to the DAC are not made through legislation, but through a consultation process among member states of the European Council.
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