From 2026, DAC8 enables EU tax authorities gain routine visibility into exchange-based digital asset activity, cutting anonymity.
Crypto markets across Europe face tighter tax oversight from January 2026 as new EU reporting rules take effect. Known as DAC8, the directive forces crypto platforms to report user transactions directly to tax authorities. Rapid growth in digital assets has made tax supervision difficult for regulators. The move targets long-standing blind spots created by decentralised networks and cross-border crypto activity.
EU Tax Authorities Move to End Anonymous Digital Asset Trading
DAC8 is the eighth update to the EU’s Directive on Administrative Cooperation and builds on earlier rules used for banks and investment firms. The directive extends automatic information-sharing to crypto transactions conducted by EU tax residents.
The rules first took effect in November 2023. EU member states were required to adopt the directive into national law by the end of 2025, with reporting starting on 1 January 2026. Information gathered during 2026 will then be shared between tax authorities from September 2027 onward.
By placing crypto under the same reporting rules as stocks or bonds, EU officials seek to curb underreporting. They also aim to speed up cross-border checks and consistency across member states.
MiCAR-Licensed Crypto Firms Face Automatic EU Tax Reporting
Reporting duties fall on crypto-asset service providers operating in the EU. These include exchanges, brokers, custodians, and platforms offering staking or lending services. Providers authorised under MiCAR are covered, along with certain firms that operate professionally in the EU but fall outside its licensing scope.
Non-EU platforms are not exempt, as any provider offering crypto services to EU users must register in one member state. These platforms must follow the same reporting rules.
Covered services include buying or selling crypto for fiat. They also include swapping one crypto asset for another and transferring crypto between users, etc. Most cryptocurrencies and asset-backed tokens fall within scope, while central bank digital currencies and some e-money products are excluded.
EU Mandates Enhanced KYC and Tax Checks for Digital Asset Platforms
To support reporting, DAC8 introduces strict due diligence requirements. Service providers must confirm who their users are and where they pay tax. A reportable user is any person or entity resident in an EU member state for tax purposes.
For each calendar year, platforms must collect and submit:
- Full legal name and address.
- Tax Identification Number and country of residence.
- Account details linked to the platform.
- Total value of crypto bought, sold, or exchanged.
- Transfers, including movements to private wallets.
Reports are sent to national tax authorities, which then share the data automatically with other EU states where users are resident.
What the New EU Reporting Rules Mean for Everyday Users
Activity on regulated platforms will now be reported by default, rather than only after targeted requests by tax offices. Transactions involving private wallets are also in scope when linked to exchanges.
For most retail crypto users, DAC8 does not introduce new tax filing obligations. Taxes on crypto gains already existed in many EU countries. The key shift lies in visibility, with tax authorities gaining routine access to transaction data rather than relying on case-by-case requests.
Under the new rules, activity on regulated crypto platforms will be reported automatically to national tax authorities. This includes trades executed on exchanges and transfers to private wallets. This gives authorities a far clearer view of crypto flows.
Key practical effects for users include:
- Automatic reporting of trades and transfers by platforms.
- Mandatory submission of tax ID details to keep accounts active.
- Greater scrutiny of undeclared trading profits.
- Reduced ability to move assets unnoticed across borders.
- Higher risk of penalties if tax filings do not match reported data.
DAC8 does not set EU-wide fines. Each member state decides penalties, provided they are effective and dissuasive. In some countries, fines for non-compliance can reach tens of thousands of euros.
Although reporting applies from January 2026, providers have a short transition window. Systems for reporting and customer checks must be fully ready by July 2026. After that date, missing or incorrect reports may trigger enforcement action.
Tax authorities are also required to report to the European Commission on how well the new cooperation rules work in tackling crypto-related tax gaps
EU Tax Transparency Push Raises Financial Privacy Concerns
Critics argue that DAC8 weakens financial privacy, a principle many crypto users value. Some warn that automated data sharing creates broad oversight of personal digital asset activity.
Supporters argue that global coordination is essential. DAC8 closely follows the OECD’s Crypto-Asset Reporting Framework, helping align EU rules with international standards. That alignment makes it harder for users or platforms to avoid reporting by moving activity offshore.
DAC8 also works alongside Markets in Crypto-Assets Regulation, which governs licensing and consumer protection. Together, both laws mark a shift toward tighter oversight of the crypto sector.
From 2026 onward, EU crypto users should assume that exchange-based activity is visible to tax authorities.
Image by Guillaume Périgois from Unsplash
Source: https://www.livebitcoinnews.com/europe-activates-dac8-how-the-new-crypto-tax-law-affects-traders/