On the 17th October 2023, the Council of the European Union adopted the DAC8– Council Directive amending Directive 2011/16/EU on Administrative Cooperation in the field of taxation. Such adoption of DAC8 followed a political agreement reached by the EU finance ministers on 16th May 2023. DAC8 significantly deals with the reporting and automatic exchange of information on revenues from transactions in crypto-assets and on advance tax rulings for high net worth individuals. The Directive on Administrative Cooperation has been amended several times in order to refine the existing criteria regarding exchange of tax. Prior to the DAC8, the Directive was amended by virtue of DAC7 (aimed to broaden rules relating to the digital economy) which was transposed into national legislation in January 2023.
The DAC8 was necessary in view of the entering into force of the Markets in Crypto-Assets Regulation (MiCA), which brings into effect uniform European market rules relating to crypto-assets.
The Main Objectives of the new amendments are:
- To strengthen existing legal framework by expanding the scope for registration and reporting obligations for more tax transparency to crypto environments.
- To improve general administrative cooperation between tax administrations.
- To extend the scope of the current rules on exchange of tax-relevant information by including provisions on exchange of advance cross-border rulings concerning high-net-worth individuals.
The scope has been broadened to cover a variety of crypto-assets including: crypto-assets issued in a decentralized manner, stablecoins, e-money tokens, and in some cases non-fungible tokens (NFTs).
Unfortunately, tax fraud, tax evasion and tax avoidance are a huge challenge at a European level. Although the DAC8 shall be implemented by the EU Member States in a uniform way, penalties differ between the different Member States. Hence, penalties shall be imposed by the Member States, in the event of non-compliance with the reporting requirements enshrined in DAC8. These penalties should be proportionate and effective.
Member States have until 31st December 2025 in order to transpose these new rules into national legislation.
