The unanimous agreement paves the way for greater co-operation between member states to reduce opportunities for tax avoidance and tax fraud using crypto assets, by amending the directive on administrative co-operation in the area of taxation (DAC).
In November 2020, the EU Council reached conclusions on tax challenges arising from digitisation. In particular, the use of alternative means of payment and investment, such as digital currencies. This led to a proposal by the EU Commission for a Council directive amending directive 2011/16/EU concerning exchange of information on crypto assets and tax rulings for wealthy individuals. This amendment is referred to as DAC 8. The Council has now reached agreement on its position.
The key objectives were:
- to extend the scope of 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;
- to extend the current rules on exchange of tax-relevant information to include exchange of advance cross-border rulings concerning high-net-worth individuals, as well as information on non-custodial dividends and similar revenues; and
- to make other administrative changes, such as improving the rules on reporting and communicating tax identification numbers (TINs) during information exchanges and amending the provisions relating to penalties for failure to adhere to reporting requirements.
The range of crypto assets included within DAC 8 is broad, including stablecoins, e-money tokens and non-fungible tokens.
This work is being done at the same time as the implementation of the OECD’s own crypto asset reporting framework (CARF). CARF provides for the reporting of tax information on transactions in crypto assets in a standardised manner, with a view to automatically exchanging such information. ICAEW responded to the OECD’s consultation on the April 2022 CARF proposals, which were presented to G20 Finance Ministers and Central Bank Governors for discussion in October 2022.
It is proposed that DAC 8, including the CARF rules, would come into effect on 1 January 2026. However, for other specific rules within DAC 8, different effective dates apply.
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