DAC8: New EU Directive on Automatic Exchange of Information for Crypto-Assets

Authors: Berta Bonet, Laura Lobón

On 17 October 2023, the Council of the European Union adopted the eighth amendment to the Directive on Administrative Cooperation (DAC8), expanding EU tax cooperation rules and introducing the automatic exchange of information on income derived from crypto-asset transactions.

The measure responds to the rapid growth of the crypto-asset market over the last decade and the need to provide tax authorities with effective tools to improve tax oversight of digital assets.

What is DAC8?

The Directive on Administrative Cooperation (DAC) is the European Union’s main legal framework for the exchange of tax information between Member States.

Since its adoption in 2011, the directive has been amended several times to broaden the scope of information exchanged between tax authorities. DAC8 represents a significant new step by introducing specific reporting obligations relating to crypto-assets.

Its primary objective is to enhance tax transparency and address tax evasion risks associated with the decentralised nature of crypto-assets.

Entry into Force

The new framework provides that the automatic exchange of information on crypto-asset transactions will begin on 1 January 2026.

EU Member States therefore have until 31 December 2025 to transpose the directive into their domestic legislation.

Who Will Be Required to Report Information?

The European Union considers crypto-asset service providers to be the entities best placed to collect and verify information relating to their users.

The reporting obligations will apply to:

• Crypto-asset service providers authorised within the European Union under the MiCA Regulation.

• Certain non-authorised providers falling within the scope of the directive.

• Operators that must register in a single Member State to fulfil their reporting obligations.

Certain transactions remain outside the scope of the reporting requirements, including direct peer-to-peer transfers conducted without an intermediary service provider and transfers between providers acting on their own behalf.

Which Users Will Be Subject to Reporting?

Reporting crypto-asset service providers will be required to disclose transactions carried out by users who are tax residents of an EU Member State.

The term “user” includes both individuals and legal entities conducting reportable transactions.

The directive also provides exemptions for certain categories of entities, including:

• Listed companies.

• Government bodies.

• International organisations.

• Central banks.

• Certain financial institutions.

What Is Considered a Crypto-Asset?

DAC8 adopts a broad definition of crypto-assets, including:

• Traditional cryptocurrencies.

• Stablecoins.

• Electronic money tokens.

• Certain non-fungible tokens (NFTs).

• Other crypto-assets that may be used for investment or payment purposes.

What Information Will Be Exchanged?

DAC8 extends the so-called “travel rule”, commonly used in traditional financial services, to crypto-asset transactions.

As a result, information regarding both the originator and the beneficiary of a transaction must accompany the transfer.

Reportable transactions include:

• Crypto-to-crypto exchanges.

• Conversions between crypto-assets and fiat currencies.

• Domestic and cross-border transfers.

• Payments for goods or services exceeding USD 50,000.

Exchange of Information with Third Countries

The scope of DAC8 extends beyond the European Union.

Non-EU jurisdictions meeting certain requirements may participate in information exchange arrangements through agreements concluded between competent authorities.

In this context, jurisdictions such as Andorra may exchange information with EU Member States concerning crypto-asset users who are tax residents within the European Union.

First Reporting Year

The first reporting period under DAC8 will cover the calendar year beginning on 1 January 2026.

Affected entities therefore have a transitional period to implement the internal procedures and compliance frameworks necessary to meet the new reporting obligations.

Conclusion

DAC8 represents one of the most significant developments in international tax transparency relating to crypto-assets in recent years. The new framework will substantially increase the amount of information available to tax authorities and will require crypto-asset service providers to strengthen their compliance and reporting systems.