The European Council has approved updated rules that extend tax reporting requirements to include transfers of crypto assets. This is the eighth version of the Directive on Administrative Cooperation (DAC), which is a set of procedures for the automatic exchange of information between European governments for tax purposes.
The DAC8 was proposed in December and was approved on May 16 after the approval of the Markets in Crypto-Assets Law (MiCA), since it depends on the definitions established in said legislation. The new DAC adheres to the Crypto Asset Disclosure Framework (CARF) and disclosure rule amendments published by the Organization for Economic Co-operation and Development (OECD) in October under a G20 mandate.
DAC8 requires crypto asset service providers (CASPs) to collect information on crypto asset transfers of any amount to ensure traceability and identify suspicious transactions. It strengthens the European Union rules against money laundering and terrorist financing and proposes the creation of a new European organization to fight against money laundering. The proposed regulation requires CASPs
“Ensuring that crypto asset transfers are accompanied by the beneficiary’s name, distributed ledger address, in cases where the crypto asset transfer is registered on a network using DLT or similar technology, and the beneficiary’s account number, in if such an account exists.
The proposed regulation further explains: “Information must be submitted securely and in advance of, or simultaneously or concurrently with, the transfer of crypto assets.”
In addition to the new requirements for CASPs, DAC8 includes new reporting rules for high-income earners and more stringent requirements for reporting Tax Identification Numbers.
We welcome the political agreement reached by EU Finance Ministers today on new tax transparency rules on the crypto-asset sector.
The Directive will improve EU countries’ ability to detect and counter tax fraud, tax evasion and tax avoidance.
More info ↓
—European Commission (@EU_Commission) May 16, 2023
Swedish Finance Minister Elisabeth Svantesson, stated in a statement:
“Today’s decision is bad news for those who have misused crypto assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war. Doing so will no longer be possible in Europe without being exposed.”
Modifications to the DAC are not made through legislation, but through a consultation process among the Member States of the European Council.
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