In a recent roll call at the European Union parliament, an overwhelming majority showed their support for the eighth version of the Directive on Administrative Cooperation (DAC8). This cryptocurrency tax reporting rule received 535 of the votes cast, with only 57 against, and 60 abstentions.
According to European Union documents, the DAC8 directive aims to equip tax collectors with the means to monitor and evaluate all cryptocurrency transactions carried out by entities or individuals within the Union. The proposed reporting framework, which was presented in December 2022, mandates crypto-asset service providers to report transactions made by EU clients. The goal is to aid tax authorities in tracking the trade of crypto-assets and the profits gained, thus reducing the possibilities of tax fraud and evasion.
The DAC8 rule, which recently sailed through its final obstacle – the plenary session vote, is expected to be fully implemented by EU member states by December 31, 2025, for it to officially launch on January 1, 2026. This decree was initially approved in May 2023 after the passage of the Markets in Crypto-Assets (MiCA) legislation. DAC8 also complies with the Crypto-Asset Reporting Framework (CARF), including the legislation specified in MiCA and, ostensibly, is applicable to all E.U.-based cryptocurrency asset transactions.
However, the DAC8 rule is not without its criticisms. Detractors have pointed out similarities between DAC8 and CARF, arguing that it barely offers anything new and appears to rob individual member states of their oversight abilities. Max Bernt, chief legal officer at Blockpit, had earlier analyzed that such dramatic change muddies the waters, particularly for Reporting Crypto Asset Service Providers who are now obligated to determine whether a transferred crypto-asset is reportable or not. There are also concerns about probable “duplicate reporting” as lawmakers grapple with integrating existing regulations with the new ones slated for implementation.
Though a step towards increased accountability in the crypto space, the approval of the DAC8 rule also raises questions about potential over-regulation and its impact on the autonomy of individual EU member countries. In essence, striking the right balance between ensuring a fair and transparent crypto market ecosystem while eliminating unnecessary bureaucratic red tape is a puzzle that still needs to be solved.
Source: Cointelegraph
