General Information on DAC8 / CARF

Data Reporting by Reporting Crypto-Asset Service Providers and Crypto-Asset Operators

The digitalization of the economy has accelerated significantly in recent years. The crypto-asset market, being inherently digital and cross-border in nature, has experienced substantial growth in both relevance and market capitalization. This rapid development presents new challenges for tax authorities.

Specifically:

a) the crypto-asset market relies heavily on distributed ledger technologies (DLT), such as blockchain, which enable the issuance, recording, transfer, and storage of crypto-assets without the involvement of traditional financial intermediaries or institutions; and

b) the market has seen the emergence of new types of intermediaries and service providers who, until recently, operated with limited regulatory oversight.

Moreover, most crypto-assets were not subject to reporting obligations under Directive 2011/16/EU (DAC) as they did not qualify as money held in deposit accounts or as financial assets. In addition, both Crypto-Asset Service Providers (CASPs) and crypto-asset operators are generally not within the scope of the definition of financial institutions under the Common Reporting Standard (CRS).

As a result, the decentralized and cross-border nature of crypto-assets, combined with a regulatory framework that did not yet adequately address them, made it difficult for tax administrations to obtain visibility into crypto-related income and holdings.

With the introduction of Directive (EU) 2023/2226 (DAC8) and the OECD Crypto-Asset Reporting Framework (CARF), the European Union and international community are taking significant steps to close this information gap and enhance tax transparency in the crypto-asset sector.