EU to Crack Down on Crypto Tax Evasion with Greater Surveillance: Impending Legislation
A formal agreement to share crypto holdings data among EU member states has been confirmed and will be presented to EU Parliament later in May.
- All EU member states are now in support of the Directive on Administrative Cooperation (DAC8), a crypto-tax framework to decrease tax evasion.
- The proposed framework would increase surveillance of crypto exchanges, marketplaces, and other crypto-related services.
- DAC8 will be consistent with other EU crypto legislation, as well as OECD guidelines on proper implementation of crypto-tax regulation.
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The European Commission is making progress toward an EU-wide agreement, called the Directive on Administrative Cooperation (DAC8), to curb tax evasion and better track crypto transactions within EU borders.
Building on top of existing legislation, the new amendment will “expand the reporting and exchange of information between tax authorities within the European Union to cover income or revenue generated by users residing in the EU while operating with crypto-assets.”
EU Commissioner and director of taxation Benjamin Angel took to Twitter on Wednesday to celebrate the overwhelming support of DAC8:
EU ambassadors have unanimously supported DAC8, paving the way for an adoption by the ECOFIN next week. Congratulations to the Swedish Presidency !
— Benjamin Angel (@benjaminangelEU) May 10, 2023
First developed and presented to the EU Commission on December 8, 2022, the framework proposes “new tax transparency rules for all service providers facilitating transactions in crypto-assets for customers resident in the European Union.” Final negotiations will take place in the European Parliament later in May 2023.
DAC8 will help EU tax authorities monitor EU residents who hold crypto in hard-to-find places, usually overseas, which would otherwise be unknown to EU authorities. The legislation will also require crypto-asset services providers, such as exchanges and marketplaces, to report customer transactions, as well as grant EU authorities additional powers to monitor those who hold over 1 million euros in high-yield assets.
The amendment is consistent with previous crypto-tax policies proposed by the Organization for Economic Co-operation and Development (OECD), which seeks to regulate crypto-tax reporting based on the suggestions of EU member countries.
The OECD released a proposal on new crypto tax reporting rules on March 22, 2022, called the Crypto-Asset Reporting Framework (CARF), in an attempt to standardize the international exchange of crypto-related transaction data between tax authorities and crypto-asset service providers.
The OECD approved the CARF in August 2022 and presented the amended standard to central bank of governors of the G20.