Lawmakers in the European Parliament have voted overwhelmingly in favor of the Directive on Administrative Cooperation (DAC8), a cryptocurrency tax reporting rule. The vote took place during a plenary session on September 13 in Strasbourg, France. The measure received overwhelming support, with 535 member votes in favor and only 57 against. Additionally, there were 60 abstentions.
DAC8 is intended to give tax authorities the power to track and assess all cryptocurrency transactions conducted by individuals and organizations within European Union member states. The European Commission proposed this reporting framework in December 2022 as a means to enable crypto-asset service providers to report transactions made by EU clients. By tracking crypto-assets’ trade and the profits gained, tax authorities hope to reduce the risk of tax fraud and evasion.
The September 13 plenary session vote was the final obstacle for DAC8 before its final passage. European Union member states will now have until December 31, 2025, to implement the rules before they officially come into effect on January 1, 2026.
The DAC8 rule comes after the approval of the Markets in Crypto-Assets (MiCA) legislation in May 2023. The “8” in the updated program’s title signifies its eighth iteration, with each previous directive addressing different aspects of financial oversight.
DAC8 aligns with the Crypto-Asset Reporting Framework (CARF) and the legislation outlined in MiCA, covering all cryptocurrency asset transactions within the EU. However, some critics argue that DAC8 offers little differentiation from CARF and takes away oversight authority from individual member states. Max Bernt, the chief legal officer at Blockpit, expressed concern about the obligation imposed on reporting crypto asset service providers to determine on a case-by-case basis whether a transferred crypto-asset is reportable or not. He also raised fears of duplicate reporting as lawmakers navigate existing regulations alongside those planned for implementation.
The adoption of DAC8 is seen as an instrumental step in harmonizing the crypto-assets market and complementing MiCA and anti-money laundering regulations. Its implementation is expected to enhance regulatory clarity and transparency in cryptocurrency transactions within the European Union.
In conclusion, the European Parliament’s resounding support for DAC8 in their plenary session signifies a significant step towards stronger regulation and oversight of cryptocurrency transactions in the EU. With member states having several years to implement the rules, the region is gearing up for a more streamlined and standardized approach to crypto tax reporting. Critics’ concerns about individual member state oversight and duplicative reporting will need to be addressed in order to ensure the smooth and efficient implementation of DAC8. Overall, the adoption of this directive sets a precedent for further regulatory measures that aim to foster transparency and accountability in the growing crypto-assets market.
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