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EU Cryptocurrency tax reporting harmonisation – DAC8

DAC8 to harmonise EU tax reporting by e-money and cryptocurrency intermediaries – 7 December 2022 proposals

 The European Commission is to publish a new Directive on Administrative Cooperation covering tax reporting on cryptocurrencies (‘DAC8’). The latest publication date is 7th December 2022.

It will aim to harmonise reporting on digital currencies, including annual reports from crypto exchanges / marketplaces. This will improve transparency on tax liabilities, helping identify income and taxable gains. It will also provide efficiencies for taxpayers and authorities via consistent information requirements across the 27 member states.

The EU VAT crypto-asset review is underway now. DAC8 was part of the original EU Tax Action Plan of 2020, with over 20 measures to improve the efficacy of the EU tax regime. DAC7 marketplace tax reporting enters into place next year.

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Following a public consultation in 2021, the draft DAC8 will be published before year end. This comes as the EU is drawing up a single licensing regime in the form of the Markets in Crypto-Assets (MICA) regulation.

Potential DAC8 reporting requirements

The likely requirements may include:

  • Annual reporting by crypto marketplaces
  • Will impact EU-resident intermediaries with scope for non-EU players with significant levels of EU trade
  • Trader background information – names, address, tax identification information
  • Transactional details of traders’ acquisitions, disposals and income

The Organisation for Economic Co-operation and Development (OECD) is also in the process of creating a crypto-asset reporting framework (CARF).

VAT on cryptocurrencies

Stage Examples VAT Treatment
Crypto-assets Payment, security or utility tokens Treated as currency
Creation of tokens Mining or forging Out of scope of VAT
Supplies free of charge Airdrop Out of scope of VAT
Supplies for consideration Taxable; but exempt
Storage and transfer Hot or cold digital wallets Taxable; but exempt
Exchange for crypto-assets or cryptocurrencies Taxable; but exempt
Cryptocurrencies as consideration for supply Taxable; VAT due
Token modification Modifications, forks or splitting of tokens Out of scope of VAT

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