The directive adopted by the Council (COUNCIL DIRECTIVE amending Directive 2011/16/EU on administrative cooperation in the field of taxation), known as DAC8, marks a significant step in enhancing administrative cooperation among EU member states in the realm of taxation, particularly in response to the challenges posed by digital assets like crypto-assets. Here are the key points highlighted in the directive:
- Expansion of Scope: DAC8 broadens the scope of reporting and automatic exchange of information to cover transactions involving crypto-assets. This includes mandatory reporting by crypto-asset service providers to facilitate tax compliance, addressing the decentralised nature of crypto-assets and their cross-border implications.
- Inclusion of Various Crypto-Assets: The directive encompasses a wide range of crypto-assets, including those issued in a decentralised manner, stablecoins like e-money tokens, and certain non-fungible tokens (NFTs), aligning with the definitions set forth in the Markets in Crypto-Assets (MiCA) regulation.
- Objectives of the Legislative Proposal: The key objectives outlined in the legislative proposal include extending the scope of automatic exchange of information to cover transactions involving crypto-assets and e-money, as well as including provisions for exchange of advance cross-border rulings concerning high-net-worth individuals. These measures aim to combat tax evasion, avoidance, and fraud in the digital economy.
- Alignment with Global Standards: The provisions of DAC8 align with international standards, such as the Crypto-Asset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS) developed by the OECD under the mandate of the G20. This alignment ensures consistency and effectiveness in combating tax-related challenges associated with crypto-assets.
- Amendments to Existing Provisions: DAC8 also amends several existing provisions of the Directive on Administrative Cooperation (DAC), including improvements to reporting and communication of Tax Identification Numbers (TINs) to facilitate tax authorities' identification of relevant taxpayers and the assessment of related taxes. Additionally, amendments to penalties for non-compliance with reporting requirements are included.
- Legislative Process: The directive underwent a thorough legislative process, including agreement on the Council's position, consultation with the European Parliament, and adoption by member states in the Council through unanimity.
Overall, DAC8 represents a concerted effort to strengthen administrative cooperation among EU member states, address tax challenges posed by digital assets, and enhance transparency and compliance in the taxation of high-net-worth individuals and non-custodial dividends.
The European Parliament adopted its opinion on the directive 13 September 2023 under the consultation procedure. The directive was adopted by member states in the Council, by unanimity. It will now be published in the Official Journal and enter into force on the twentieth day following that of its publication. Member States will have until 31 December 2025 to transpose the new rules into national law and such rules will apply as of 1 January 2026 (with some exceptions).
About the Author
This article has been authored by Dr Franklin Cachia, Director - Tax & Regulated Industries. Contact us here or on [email protected] for more information.
