Tax policy alert - European Commission publishes crypto and other revised reporting proposals for tax (DAC8)

The European Parliament's recommendations to the EU Commission on a fair and simple taxation strategy included further categories of income and assets, such as crypto assets, to include in the scope of automatic exchange of information. The seventh potential update published by the European Commision to the EU’s Directive on Administrative Cooperation on Tax (DAC), which would make this DAC8, is to address certain deficiencies that have been identified in the scope of the automatic exchange of information, including to set minimum levels of financial penalties with respect to serious non-compliance.

• Amendments would address the lack of information at the level of EU tax administration about e-money, digital currencies, cross-border tax rulings for high net worth individuals, and certain crypto assets.

• The crypto asset and e-money element largely follows the model rules of the OECD’s Crypot-Asset Reporting Framework (CARF) which was published in October, along with amendments to the Common Reporting Standard (CRS), as set in our Alert of 11 October 2022.

• The Commission believes this information will level the playing field and raise additional tax revenues of €2.4B by the EU Member States; implementation costs are estimated at €300M with annual recurring costs of €25M.

• With a few exceptions these changes would apply from 1 January 2026.