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DAC8
The rapid growth of crypto-assets has posed increasing challenges for tax authorities, largely due to their decentralised structure and inherently cross-border nature. Traditional tax reporting mechanisms were not designed to capture income and gains derived from crypto-asset transactions, creating heightened risks of tax evasion and avoidance. Against this backdrop, the European Union (hereinafter referred to as EU) adopted Directive (EU) 2023/2226, commonly referred to as DAC8, with the aim of strengthening administrative cooperation between Member States through the automatic exchange of tax-relevant information on crypto-assets.
DAC8 represents the eighth amendment to the Directive on Administrative Cooperation in the field of direct taxation and marks a significant expansion to the EU's tax transparency framework. By extending the scope of automatic exchange of information to crypto-asset transactions carried out by EU-resident users, the Directive seeks to ensure that income and capital gains derived from such activities are effectively identified, assessed and taxed across the Union.
The Directive entered into force on 13 November 2023. Member States were required to transpose DAC8 into national law by 31 December 2025, with the new reporting obligations applying from 1 January 2026. The first reporting year will therefore be 2026, with the initial exchanges of information between tax authorities expected by 30 September 2027.
What does DAC8 regulate?
At the core of DAC8 is the introduction of comprehensive reporting obligations for Reporting Crypto-Asset Service Providers (RCASPs). These include crypto-asset service providers authorised under the Regulation on Markets in Crypto-Assets (MiCA), as well as certain crypto-asset operators providing services on a professional basis within the EU but falling outside MiCA's authorisation. To ensure regulatory consistency, DAC8 relies extensively on MiCA definitions relating to crypto-assets and crypto-asset services.
Furthermore, where non-EU providers offer services within the Union, the Directive introduces a single registration mechanism, enabling them to comply with reporting obligations through registration in one Member State.
The scope of services covered by DAC8 is intentionally broad. It includes the custody and administration of crypto-assets, the operation of trading platforms, exchanges between crypto-assets and fiat currencies or other crypto-assets, the execution and transmission of orders, portfolio management, transfer services, as well as staking and lending activities. Reportable crypto-assets encompass cryptocurrencies, asset-referenced tokens and certain equity or debt-type tokens, while central bank digital currencies and electronic money are generally excluded.
To support effective reporting, DAC8 imposes detailed due-diligence obligations on RCASPs. Service providers are required to identify reportable users and determine their tax residence. A reportable user is any individual or entity resident in a Member State for tax purposes. For each reporting period, RCASPs must collect identifying information, including names, addresses and tax identification numbers, together with transactional data relating to reportable crypto-asset transactions, such as their value and volume. This information must be reported annually to the competent national tax authority, which is then obliged to automatically exchange it with the tax authorities of the Member States in which the users are resident.
Moreover, DAC8 is not an isolated EU initiative but forms part of a broader international effort to enhance tax transparency in the crypto-asset sector. In particular, the Directive aligns closely with the OECD's Crypto-Asset Reporting Framework (CARF). By incorporating CARF into EU law, DAC8 promotes consistency between EU and global reporting standards and facilitates cooperation with third-country tax authorities, reflecting the recognition that the risks associated with crypto-assets cannot be effectively addressed through purely domestic measures.
Beyond crypto-asset reporting, DAC8 also introduces targeted amendments to the wider administrative cooperation framework. These include extensions to the automatic exchange of information on certain advance cross-border tax rulings, as well as updates to the Common Reporting Standard to capture specific electronic money products and central bank digital currencies. Together, these measures further enhance the ability of tax authorities to identify relevant taxpayers and assess tax liabilities accurately.
With respect to enforcement, DAC8 does not establish a harmonised penalties regime at EU level. Instead, Member States retain discretion in determining the penalties applicable for non-compliance, provided that such penalties are effective, proportionate and dissuasive. This approach preserves national autonomy while ensuring a consistent baseline for enforcement across the Union.
At national level, Member States need to evaluate the legislative and operational changes required to implement DAC8. While jurisdictions with existing crypto and tax reporting frameworks may experience an incremental evolution rather than a fundamental overhaul, tax authorities nonetheless need to adapt their administrative systems to accommodate new reporting streams and enhanced information exchanges.
In Malta, the Tax & Customs Administration had indicated that DAC8 is to be transposed into domestic law by the end of 2025. However, as of now, no official announcement regarding the completion of transposition has been made. Consequently, Malta already maintains a well-established regulatory framework for digital assets and tax information exchange, so the implementation of DAC8 is expected to build on these existing structures. Nonetheless, crypto-asset service providers operating in or from Malta will be required to comply with strengthened due diligence and reporting obligations under the new regime.
Overall, DAC8 represents a significant step in the EU's ongoing efforts to modernise its tax transparency framework in response to the growth of the digital economy. By extending automatic exchange of information to crypto-assets and aligning EU rules with international standards, the Directive seeks to balance the promotion of innovation with the need for fair and effective taxation, while providing greater legal certainty for both tax authorities and market participants.
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