The European Council has approved updated rules extending tax reporting requirements to include transfers of crypto assets. This is the eighth edition of the Directive on Administrative Cooperation (DAC), a set of procedures for the automatic sharing of information between European governments for tax purposes.
DAC8 was proposed in December and was approved on May 16 following the passage of the Market in Cryptoassets (MiCA), as it depends on the definitions established in that legislation. The new DAC complies with amendments to reporting standards issued by the Crypto Assets Reporting Framework (CARF) and the Organization for Economic Co-operation and Development (OECD) in October under the mandate of the G20. 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 strengthens EU anti-money laundering and counter-terrorist financing (AML/CFT) rules and proposes the creation of a new European anti-money laundering agency. The proposed regulations require CASPs to:
“Ensure that transfers of cryptographic assets are accompanied by the beneficiary's name, the beneficiary's distributed ledger address, if the transfer of cryptographic assets is registered on the network using DLT or similar technology, [and] the beneficiary's account number, where such account." The proposed regulations further explain: “Information shall be submitted in a secure manner and submitted prior to or concurrently with the transfer of cryptographic assets.” In addition to the new requirements for CASP, DAC8 also includes new reporting rules related to high-income individuals and stricter requirements for communicating tax file numbers. Swedish Finance Minister Elisabeth Svantesson said in a statement:
“Today's decision is bad news for those who misuse crypto assets for illegal activities, circumvent EU sanctions or finance terrorism and war. Without exposure, it will no longer be possible to do so in Europe.” Amendments to the DAC are not made through legislation , but through a consultative process among the member states of the Council of Europe.
