European Union Adopts Official Regulations for Cryptocurrency Tax Information Exchange
The European Union has officially approved new regulations allowing tax authorities to share information regarding individuals’ cryptocurrency holdings.
These regulations were endorsed by the finance ministers of EU member states and will soon be published in the EU’s Official Journal. They are set to become effective 20 days after their publication.
These rules, initially proposed last year, aim to prevent the use of cryptocurrencies for concealing assets abroad. Remarkably, they received unanimous support from EU member states, despite much of the discussions occurring behind closed doors.
In May, a leaked draft of the legislation, obtained by CoinDesk through freedom of information laws, revealed that these rules would extend the existing law to encompass various digital assets, such as stablecoins, non-fungible tokens (NFTs), decentralized finance (DeFi) tokens, and income generated from crypto staking.
This legislation, referred to as the Eighth Directive on Administrative Cooperation (DAC8), compels cryptocurrency companies to share information about their customers’ holdings with tax authorities automatically.
The European Commission, responsible for proposing new EU laws, pointed out that DAC8’s crypto provisions complement the Markets in Crypto Assets Regulation (MiCA) and the anti-money laundering rules outlined in the Transfer of Funds Regulation (TFR).
According to the Commission, the directive will enhance the ability of EU member states to identify and combat tax fraud, avoidance, and evasion. It mandates all EU-based crypto-asset service providers, irrespective of their size, to report transactions involving customers residing in the EU.
Furthermore, these regulations have been broadened to also encompass financial institutions with regard to electronic money and central bank digital currencies (CBDC).
