The European Union finance ministers formally approved new regulations that empower tax authorities to exchange data related to individuals’ cryptocurrency holdings. The official publication of these rules in the EU’s Official Journal will be followed by their enactment within 20 days.
These regulations, proposed the previous year, have the primary aim of preventing individuals from concealing their assets abroad through the use of cryptocurrencies. These rules enjoyed unanimous support from EU member states, although most discussions occurred behind closed doors.
An earlier draft of the legislation, obtained through freedom of information requests in May, revealed that the rules expanded the coverage of an existing law to include a wide range of digital assets, now confirmed to encompass stablecoins, non-fungible tokens (NFTs), decentralized finance (DeFi) tokens, and proceeds from crypto staking.
Formally known as the Eighth Directive on Administrative Cooperation (DAC8), this law compels cryptocurrency companies to report details about their customers’ holdings, which will be automatically exchanged among tax authorities.
The European Commission, responsible for proposing new EU legislation, stated that DAC8’s crypto provisions complement the recently finalized Markets in Crypto Assets Regulation (MiCA) and anti-money laundering regulations established under the Transfer of Funds Regulation (TFR). These rules aim to enhance the ability of member states to identify and combat tax fraud, evasion, and avoidance.
The directive’s scope has been expanded from earlier versions to also encompass financial institutions, particularly with regard to electronic money and central bank digital currencies (CBDC).
