EU Parliament Approves DAC8 Crypto Tax Rule

On Wednesday, the European Parliament took a significant step forward in regulating cryptocurrency. Meeting in Strasbourg, France, lawmakers voted in favor of the eighth iteration of the Directive on Administrative Cooperation (DAC8). The measure garnered 535 votes for, 57 against, and 60 abstentions. This move marks a pivotal moment in crypto-asset regulation within the European Union.

What DAC8 Means for Crypto-Asset Regulation

Significantly, the approval of DAC8 follows closely on the heels of the Markets in Crypto-Assets (MiCA) legislation enacted earlier this year. Consequently, MiCA laid down the regulatory framework for crypto-assets in the EU, and the DAC8 directive serves as an extension of this legislation.

Moreover, it allows them to track and assess all cryptocurrency transactions conducted by organizations or individuals within the Union. As a result, this measure will enhance the EU’s ability to crack down on tax fraud and evasion in the burgeoning crypto market.

The sweeping change requires crypto-asset service providers (CASPs) to collect detailed transaction information. Significantly, this encompasses transfers of crypto-assets of any size. In addition, CASPs must securely furnish this data concurrently or before the asset transfer.

Additionally, DAC8 aligns with other international protocols since it adheres to the Crypto-Asset Reporting Framework (CARF) and the Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) rules. In essence, the directive strengthens pre-existing mechanisms to combat illegal activities, bolstering the integrity of the European financial system.

The new rule also sets the stage for a new European AML body. Besides, it amplifies reporting regulations related to high-income individuals and intensifies requirements for communicating Tax Identification Numbers.

Window for Adaptation

While the vote concludes DAC8’s legislative journey, the actual implementation still lies ahead. EU member states have until December 31, 2025, to adapt their systems, with the rules going into full effect on January 1, 2026. Hence, this provides ample time for governments and crypto-asset service providers to align with the new regulations.

However, critics argue that DAC8 merely extends existing frameworks like CARF. They contend that it dilutes the oversight ability of individual member states. However, Swedish Finance Minister Elisabeth Svantesson countered this, stating,

“Today’s decision is bad news for those who have misused crypto-assets for their illegal activities.”

The passing of DAC8 marks a monumental step for the EU in regulating crypto-assets since it addresses tax fraud, anti-money laundering, and counter-terrorism financing. While it may face detractors, the overwhelming support it received in the European Parliament indicates that it’s a crucial part of the EU’s evolving financial landscape.

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Kelvin is a distinguished writer specializing in crypto and finance, backed by a Bachelor’s in Actuarial Science. Recognized for incisive analysis and insightful content, he has an adept command of English and excels at thorough research and timely delivery.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.