EU to crack down on crypto tax evasion with greater scrutiny: legislation imminent

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Key takeaways All EU member states now support the Administrative Cooperation Directive (DAC8), a crypto-tax framework aimed at reducing tax evasion. The proposed framework would increase oversight of crypto exchanges, marketplaces, and other crypto-related services. The DAC8 will comply with other European crypto legislation, as well as OECD guidelines on the proper implementation of crypto tax regulations. Share this article

The European Commission is moving towards an EU-wide agreement, called the Administrative Cooperation Directive (DAC8), to combat tax evasion and better track crypto transactions within EU borders.

Building on existing legislation, the new amendment “will extend the reporting and exchange of information between tax authorities within the European Union to cover income or income generated by users residing in the EU while by operating with crypto-assets”.

EU Commissioner and Tax Director Benjamin Angel took to Twitter on Wednesday to celebrate the overwhelming support for CAD8:

EU ambassadors unanimously backed DAC8, paving the way for adoption by ECOFIN next week. Congratulations to the Swedish Presidency!

— Benjamin Angel (@benjaminangelEU) May 10, 2023

Developed and first presented to the European Commission on December 8, 2022, the framework proposes “new tax transparency rules for all service providers facilitating transactions in crypto-assets for customers residing in the European Union”. Final negotiations will take place in the European Parliament later in May 2023.

DAC8 will help EU tax authorities monitor EU residents who hold crypto⁠ in hard-to-find locations, usually overseas, that would otherwise be unknown to EU authorities. The legislation will also require providers of crypto-asset services, such as exchanges and marketplaces, to report customer transactions⁠, and grant EU authorities additional powers to monitor those who hold more than one million euros of high yield assets.

The amendment is in line with previous crypto-tax policies proposed by the Organization for Economic Co-operation and Development (OECD), which seeks to regulate crypto-tax reporting based on suggestions from EU member countries.

The OECD published on March 22, 2022 a proposal on new tax reporting rules on cryptocurrencies, called the Crypto-Asset Reporting Framework (CARF), with the aim of standardizing the international exchange of transaction data. related to crypto between the tax authorities and the crypto-asset service. suppliers.

The OECD endorsed the CARF in August 2022 and presented the amended standard to the G20 central bank governors.

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