EU Commission prepares new DAC8 Directive on automatic sharing of information between crypto exchanges and tax authorities
A few years ago, people used to jokingly say: "If even your grandparents start asking about Bitcoin, it’s an unmistakable sign that the market has peaked and that you should sell your assets immediately." In the meantime, the entire market has matured and more and more retail and institutional investors see crypto as an asset class that is here to stay.
Based on a study in which we were involved, tax revenues of 1.28 billion euros for Germany and 375 million euros for Austria were calculated for 2019, which corresponded to about 2% of Germany’s total income tax revenue. Of course, this fact does not remain hidden from the tax authorities, which is why the planned DAC-8 Directive ("Directive on Administrative Cooperation" or EU Mutual Assistance Directive) is intended to create new possibilities at an EU level for detecting tax fraud and tax evasion.
The EU’s 5th Money Laundering Directive, which came into force at the beginning of 2020, already introduced an increased due diligence obligation for exchanges with regard to transparency, traceability of the origin, and transfer of crypto assets. These mechanisms are now to be enhanced with the adoption of Directive 2011/16/EU planned by the EU Commission for the second half of 2021. As a result, the DAC8 directive could be implemented in 12-18 months. This is intended to give tax authorities a new tool to curb tax fraud in the cryptocurrency sector and mandate an expansion of the automatic exchange of information with the respective tax authorities.
According to our CEO Florian Wimmer, "Crypto exchanges in Europe will have to transmit user and transaction data and realized profits to the local authorities on an annual basis. Then the tax authorities can match whether that was also declared in the income tax return – if not, then there will probably be a few letters in the next few years."
It now remains to be seen how member states will agree and what content will be specifically applied, but the debate shows that policymakers are aware of the ever-growing importance of crypto assets and want to ensure that the relevant authorities collect the taxes due.
Find out how significant and extensive this debate is and why it is so difficult for regulators to properly classify cryptocurrencies in BMCP.live’s Crypto Tax Pannel with our partners at KPMG Austria Michael Petritz and Michael Deichsel and our CEO Florian Wimmer.
Through the expertise of our partners, Blockpit ensures that country-specific tax reports comply with the current legal situation and offer crypto traders and investors maximum legal compliance.
Disclaimer: The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. For detailed information on crypto regulations, we recommend contacting a certified legal advisor in the respective country. If any questions occur, feel free to contact us on our social media channels.