- EU finance ministers have formally adopted new rules allowing tax authorities to share information on individuals’ crypto holdings
- The rules aim to prevent crypto assets from being hidden abroad
- These regulations require crypto companies to report customer holdings data, enhancing tax authorities’ capacity to combat fraud and evasion
New European Union rules that allow tax authorities to share data on individuals’ crypto holdings were formally adopted by the bloc’s finance ministers on Tuesday. The document will be published in the EU’s Official Journal and enter into force within 20 days, with the changes meaning that cryptocurrency holders will not be able to conceal their holdings overseas. The rule change gained unanimous support from EU member states, despite discussions largely taking place behind closed doors.
DAC8 Expanded to Include Crypto
The potential extension of the financial rules governing EU asset reporting to include digital currencies was revealed in May, with discussions revolving mostly around stablecoins, NFTs, DeFi tokens, and proceeds from cryptocurrency staking. The law, known as the Eighth Directive on Administrative Cooperation (DAC8), imposes an obligation on crypto companies to report information on customers’ holdings, which will automatically be shared between tax authorities.
The European Commission, responsible for proposing new EU legislation, stated on Tuesday that DAC8’s provisions for cryptocurrencies complement the recently finalized landmark Markets in Crypto Assets Regulation (MiCA) and anti-money laundering rules under the Transfer of Funds Regulation (TFR).
Rule Change Will Help in Combating Tax Fraud
In a statement on Tuesday, the Commission stated that the directive will “improve Member States’ ability to detect and combat tax fraud, avoidance, and evasion, by requiring all EU-based crypto-asset service providers, regardless of their size, to report transactions from customers residing in the EU.”
The scope of the rules was expanded from previous versions to apply to financial institutions with respect to electronic money and central bank digital currencies.
