EU Wants to Crack Down on Crypto Tax Evasion with Stronger Monitoring
DAC8 will help EU tax authorities monitor EU citizens holding cryptocurrencies in hard-to-detect locations, that would otherwise go unnoticed by EU authorities. The legislation will also require crypto-asset service providers, including exchanges and marketplaces, to report customer transactions. EU authorities will be granted enhanced powers to monitor individuals holding high-yield assets worth more than €1 million.
The European Commission is making progress on implementing an EU-wide agreement called the Directive on Administrative Cooperation (DAC8) to combat tax evasion and improve the tracking of crypto transactions within EU borders.
DAC8 builds on existing legislation and aims to “expand the reporting and exchange of information between tax authorities within the European Union to cover income or transactions made by EU resident users working with crypto assets.”
EU Commissioner and Director of Taxation Benjamin Angel expressed his delight on Twitter, celebrating the unanimous support for DAC8 by EU ambassadors, which paves the way for its adoption by ECOFIN next week.
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DAC8 will help EU tax authorities monitor EU citizens holding cryptocurrencies in hard-to-detect locations
The initial proposal for DAC8 was developed and submitted to the EU Commission on December 8th, 2022. The framework proposes “new tax transparency rules for all service providers facilitating transactions in crypto-assets for customers residing in the European Union.” Final negotiations are scheduled to take place in the European Parliament later in May 2023.
DAC8 will help EU tax authorities monitor EU citizens holding cryptocurrencies in hard-to-detect locations, often abroad, that would otherwise go unnoticed by EU authorities. The legislation will also require crypto-asset service providers, including exchanges and marketplaces, to report customer transactions. In addition, EU authorities will be granted enhanced powers to monitor individuals holding high-yield assets worth more than €1 million.
This change is in line with previous Organization for Economic Cooperation and Development (OECD) crypto tax guidelines, which aim to regulate crypto tax reporting based on recommendations from EU member countries.
On March 22nd, 2022, the OECD published a proposal for new crypto tax reporting rules called the Crypto-Asset Reporting Framework (CARF) with the aim of standardizing the international exchange of crypto-related transaction data between tax authorities and crypto-asset service providers provider.
The CARF was approved by the OECD in August 2022 and subsequently the amended standard was submitted to the G20 central bank governors. The proposed DAC8 in the EU is consistent with broader international efforts to establish effective regulations and reporting frameworks for cryptoassets.
(Featured image by dimitrisvetsikas1969 via Pixabay)
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