Crypto assets and tax authorities, a special kind of relationship: After numerous tax authorities, including in Austria, have collected tax on profits from cryptocurrencies, the European Commission is now also on the field. And now wants to extend an already known plan, namely the “Directive on Administrative Cooperation” (DAC8), i.e. a guideline for official cooperation, to crypto companies that are not based in the EU. This is to prevent EU citizens from being able to store their crypto assets tax-free abroad.
As already reported, DAC8 aims to ensure that in the future crypto exchanges must transfer transaction data on Bitcoin and Co. to the tax authorities. From this, these authorities could deduce who made what profit with crypto assets – and then demand the corresponding taxes on them. Until now, it has been assumed that this rule would primarily affect companies based in the EU – such as Bitpanda (Trending Topics reported). But now it is emphasized that it should apply to all crypto companies worldwide as long as these EU citizens are among their customers
The fight against tax avoidance and evasion is also the reason for today’s further initiative, the recent amendment of the Administrative Cooperation Directive, also known as DAC8. Today we are proposing new tax transparency rules for all service providers that facilitate cryptocurrency transactions for customers resident in the EU,” said Paolo Gentiloni, EU Commissioner for Economy, Monetary Affairs and Taxation. “The protection of anonymity, the fact that there are currently more than 9,000 different cryptoassets, and the inherently digital nature of trading means that many users of cryptoassets who make large profits remain under the radar of national tax authorities.”
DAC8: Crypto Exchanges Should Transfer Transaction Data About Bitcoin and Co. to the tax authorities
Crypto companies from countries outside the EU are also affected
EU Commission proposal: Member States should receive data transactions from customers based in the EU from crypto-asset providers, regardless of their size or location. Nor should it matter whether the transactions are domestic or cross-border. For this to work, DAC8 needs to align with the agreed timetable for the implementation of the OECD reporting framework for cryptoassets. “Both DAC8 and the rules in this framework will enter into force on January 1, 2026. All countries that have accepted the OECD reporting framework for cryptoassets, including the United States, will follow a similar timeline.
The goal for the EU Commission is that the member states must be able to count on “solid and predictable tax revenues” and intervene across borders against tax fraud and tax evasion using crypto-assets. A “minimum level of sanctions for the most serious infringements” should also be set – that is, high penalties for infringements. The plans for the digital euro and its competitors should not be missing either. Financial institutions will be required to also report on e-money and central bank digital currencies. It will include the digital dollar or the digital yuan from China.
In Austria, too, the Ministry of Finance has long been on the hunt for tax evaders in the crypto sector. The “GraphSense” software from Viennese startup Iknao is used for this. The Bavarian Ministry of Justice has also become a customer. Authorities are looking for suspicious transactions on the blockchain. However, it usually becomes difficult to track down the owners of the wallets. As a hub of the industry, crypto exchanges are the companies that can have a lot of knowledge about wallets and associated owners because they usually have to identify users via KYC.
Crypto tax evaders: Finanz relies on startup software GraphSense