News in the crypto tax sector, with the European Union announcing that it has officially adopted the new directive for the tax sector: the DAC8 (the Eighth Directive on Administrative Cooperation).
The new rules mainly aim to achieve automatic exchange of information on income from cryptocurrency transactions.
Crypto taxes: European Union adopts DAC8 directive strengthening tax reporting
The European Council issued a press release officially announcing that it has adopted DAC8 (the Eighth Directive on Administrative Cooperation).
These are new rules that aim to strengthen cooperation between national tax authorities by establishing automatic communication covering income from cryptocurrency transactions and tax rulings for wealthy individuals.
Basically, the European Union is scrambling to help member states meet the challenges posed by the digitization of the economy. In this regard, the European Council said thus:
“So far, the decentralised nature of crypto-assets has made it difficult for member states’ tax administrations to ensure tax compliance. The inherent cross-border nature of crypto-assets requires strong international administrative cooperation to ensure effective tax collection.”
And indeed, through DAC8, crypto companies will be required to report information on their clients’ holdings, which will be immediately shared with tax authorities.
Crypto taxes: EU’s DAC8 includes stablecoin, NFT, DeFi and staking
The DAC8 legislation includes under the word crypto-asset stablecoins, Non-Fungible Tokens (NFTs), decentralized finance tokens (DeFi) and income from staking on cryptocurrencies.
Not only that, the European Council stressed that the provisions of DAC8 mirror the Crypto-Asset Reporting Framework (CARF) and a series of amendments to the Common Reporting Standard (CRS), prepared by the OECD under a G20 mandate.
Specifically, they discuss provisions that address due diligence procedures, reporting requirements and other rules applicable to crypto-asset reporting service providers.
In addition, the new provisions will complement existing regulations, such as the Regulation on Crypto-asset Markets (MiCA) and anti-money laundering rules under the Transfer of Funds Regulation (TFR).
DAC8 will now be published in the Official Gazette and will enter into force on the 20th day following its publication.
Growing crypto market in Europe
In recent days, a Chainalysis report was published that talked about the growth of the crypto market in Europe.
Europe, however, was defined as the CNWE region that includes the EU, and other countries such as the United Kingdom, Norway, Iceland, Albania, and Serbia, excluding Russia, Belarus, and Ukraine.
That CNWE region accounted for 17.6% of the trading volume of the entire crypto market globally between July 2022 and June 2023, with a total on-chain value of about one trillion.
CNWE, however, is not the first crypto market in the world, but second. And in fact, in first place is the North American region of which the U.S. is a part, with a volume of 20%. In third place, then, is the CSAO region, which includes South Central Asia and Oceania with the trading volume just below CNWE.