As published on: coingeek.com, Tuesday 19 September, 2023.
The European Union parliament has voted overwhelmingly in favor of an updated digital asset tax reporting rule, DAC8, which will help tax authorities to track the trade of digital assets and the proceeds gained, reducing the risk of tax fraud and evasion.
A plenary session of the European Parliament saw lawmakers vote in support of the eighth iteration of the Directive on Administrative Cooperation (DAC8), a digital asset tax reporting rule that aims to facilitate the automatic exchange of digital asset information among EU tax authorities.
The session was held in Strasbourg, France, where the DAC8 passed with an overwhelming majority of 535 member votes to 57 against; 60 members abstained.
The eighth iteration of the DAC—previous directives addressed different aspects of financial oversight— introduces tax reporting requirements for digital asset transactions and aims to provide tax authorities with the necessary tools to monitor and assess digital asset transactions carried out by individuals and organizations within EU member states.
“This would help tax authorities to track the trade of crypto-assets and the proceeds gained, thereby reducing the risk of tax fraud and evasion,” said the EU Parliament. “The proposal also puts forward a series of (smaller) changes to improve the existing exchange of tax-related information.”
DAC8 was proposed in December 2022 and approved on May 16, 2023, after the passage of the EU’s landmark MiCA legislation, the new tax framework is dependent on definitions laid down by MiCA.
Under the new rule, crypto asset service providers (CASPs) are required to collect information on digital asset transfers of any amount to ensure traceability and identify suspicious transactions; it strengthens the European Union’s Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) rules, and proposes the creation of a new European AML body. DAC8 also introduces new reporting rules relating to high-income individuals and tougher requirements for communicating Tax Identification Numbers.
The updated framework adheres to the Crypto-Asset Reporting Framework (CARF)—which provides for the reporting of tax information on digital asset transactions in a standardized manner—and amendments to reporting standards published by the Organisation for Economic Cooperation and Development (OECD) in October.
“Today’s decision is bad news for those who have misused crypto-assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war. Doing so will no longer be possible in Europe without exposure,” Swedish Finance Minister Elisabeth Svantesson said when the DAC8 was approved back in May.
The new tax reporting rule was also hailed outside of parliament. The European Crypto Initiative, a Digital asset advocacy group, on Wednesday described DAC8 as “an instrumental legislation designed to further harmonize the crypto-assets market, complementing MiCA and AML regulations.”
The plenary session vote was the final obstacle to DAC8 being passed into law. Now, EU member states will have until December 31, 2025, to implement the rules before they officially come into force on January 1, 2026.
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