European Parliament Supports DAC8 Crypto Tax Rule by an Overwhelming Margin
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Lawmakers in the European Parliament have expressed support for the eighth iteration of the Directive on Administrative Cooperation (DAC8), a measure that introduces tax reporting requirements for crypto transactions.
During a plenary session held in Strasbourg, France, on September 13, an overwhelming 535 members voted in favor of the bill, with only 57 votes against and 60 abstentions.
DAC8, as outlined in European Union documents, aims to provide tax authorities with the necessary tools to monitor and assess cryptocurrency transactions carried out by individuals and organizations within EU member states.
Heads up: The European Parliament plenary adoption of the #DAC8 is happening today📣
— European Crypto Initiative (@EuCInitiative) September 13, 2023
As a reminder: DAC8 is an instrumental legislation designed to further harmonise the crypto-assets market, complementing #MiCA and #AML regulations.
What are your thoughts on the DAC8 adoption? pic.twitter.com/YRFZSBJYwp
The proposed reporting framework, introduced by the European Commission in December 2022, would require crypto-asset service providers to report transactions made by EU clients.
The goal is to enhance transparency, mitigate the risk of tax fraud and evasion, and enable more effective tracking of crypto-assets and their associated proceeds.
“This would help tax authorities to track the trade of crypto-assets and the proceeds gained, thereby reducing the risk of tax fraud and evasion.”
The recent plenary session vote marked the final stage before DAC8 became law.
EU member states now have until December 31, 2025, to implement the rules, which are set to officially take effect on January 1, 2026.
The EU Leads in Crypto Regulation
DAC8 follows the approval of the Markets in Crypto Asset (MiCA) legislation in May 2023, which aims to counter the “wild west” mentality prevalent in the digital assets space.
The regulation is intended to provide legal clarity to the sector and protect investors from fraudulent actors while promoting innovation in the space.
The rules, expected to be implemented in 2024, require firms that want to issue, trade, and safeguard crypto assets, tokenized assets, and stablecoins in the 27-country bloc to obtain a license.
Meanwhile, the “8” in the directive’s title suggests its eighth iteration, with each previous version addressing different aspects of financial oversight.
The current version of DAC8 aligns with the Crypto-Asset Reporting Framework (CARF) and the legislation outlined in MiCA, providing comprehensive coverage for cryptocurrency asset transactions within the EU.
However, some critics of DAC8 argue that it is not much different from CARF and reduces the oversight authority of individual member states.
Max Bernt, the chief legal officer at Blockpit, voiced concerns about the obligation of reporting crypto asset service providers to determine on a case-by-case basis whether a transferred crypto-asset is reportable or not.
“In this respect, there is a risk that there are potentially significant differences in interpretation and that this lack of coherence may reduce the effectiveness and efficiency of the DAC-regime.”
He also expressed worries about potential duplicate reporting as lawmakers navigate the existing regulations alongside those planned for implementation.
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