Title: EU Council Adopts DAC 8 Directive to Enhance Tax Oversight on Crypto Transactions.
The Council of the EU has adopted the DAC8 directive to enhance administrative cooperation among national tax authorities concerning crypto-asset transactions and tax rulings for high-net-worth individuals. The directive broadens the scope of assets covered, mandates automatic information exchange, and aligns with global standards set by the OECD and G20 to address challenges posed by the digital economy.
Prior to December 7, 2021, the council indicated in its report to the European Council that it expects the European Commission to submit a legislative proposal in 2022 on further revision of the directive 2011/16 / EU on administrative cooperation in the field of taxation (DAC), concerning exchange of information on crypto-assets and tax rulings for wealthy individuals.
On 8 December 2022, the commission presented a proposal for a Council directive amending directive 2011/16/EU on administrative cooperation in the field of taxation
(DACS). The key objectives of this legislative proposal are the following:
to extend the scope of the automatic exchange of information under DAC to information that will have to be reported by crypto-asset service providers on transactions (transfer or exchange) of crypto-assets and e-money. Expanding administrative cooperation to this new area is aimed at helping member states address the challenges posed by the digitalization of the economy. The provisions of DAC 8 on due diligence procedures, reporting requirements, and other rules applicable to reporting crypto-asset service providers will reflect the Crypto-Asset Reporting Framework (CARF) and a set of amendments to the Common Reporting Standard (CRS), which were prepared by the OECD (Overseas Economic and Cooperation Development ) under the mandate of the G20. The G20 endorsed the CARF and the amendments to CRS, both of which it considers to be integral additions to the global standards for the automatic exchange of information to extend the scope of the current rules on the exchange of tax-relevant information by including provisions on the exchange of advance cross-border rulings concerning high-net-worth individuals, as well as provisions on automatic exchange of information on non- custodial dividends and similar revenues, to reduce the risks of tax evasion, tax avoidance, and tax frauds as the current provisions of DAC do not cover this type of income, to amend a number 4 other existing provisions of DAC.
In particular, the proposal seeks to improve the rules on reporting and communication of the Tax Identification Number (TIN) to facilitate the task of tax authorities of identifying the relevant taxpayer and correctly assessing the related taxes, and to amend DAC provisions on penalties that are to be applied by member states to persons for the failure of compliance with national legislation on reporting requirements adopted under DAC.
During the consultation procedure, the European Parliament adopted its opinion on the directive on the 13th of September 2023 under the 16th May 2023 agreement by the council.
The directive was adopted by the member states in the Council, unanimously. It will now be published in the Official Journal and enter into force on the twentieth day following that of its publication.