Key conclusions

• The novel EU cryptocurrency tax rules do not introduce novel taxes, but raise tax transparency by ensuring that cryptocurrency transactions between member states are reported and made available.

• Reporting obligations primarily fall on cryptocurrency service providers and require them to collect user identity, tax residence and transaction data in a standardized format.

• Information reported by the platforms will be automatically exchanged between EU tax authorities, reducing cross-border reporting gaps for cryptocurrency users.

• The framework aligns with the Organization for Economic Co-operation and Development’s global cryptocurrency reporting standard, increasing compliance with non-EU jurisdictions.

The European Union intends to significantly improve the monitoring of cryptocurrency transactions for tax purposes. From January 1, 2026, the updated reporting obligations require crypto platforms operating in the EU or serving EU users to provide tax authorities with detailed information about users and their transactions. This change better aligns digital assets with transparency requirements long established in conventional finance.

The key legislation driving this change is Council Directive (EU) 2023/2226, commonly known as DAC8. It extends the existing EU framework for the automatic exchange of tax information to include crypto assets. Combined with the Markets in Cryptocurrency Regulation (MiCA), DAC8 represents an crucial step in the regulation of the cryptocurrency sector. It focuses specifically on taxation and not solely on market conduct or licensing.

This article explains how the EU’s novel cryptocurrency tax reporting system will work, outlines the obligations of platforms, and examines the implications for individual users when the rules come into effect.

Why DAC8 is being introduced: Closing the gap between banks and blockchains

For over a decade, EU countries have been using the Directive on Administrative Cooperation (DAC) to automatically share cross-border tax-related financial data. Previous iterations covered bank accounts, investment income and some digital platforms, but cryptocurrency transactions were largely excluded from routine reporting.

As cryptocurrencies grow in popularity in Europe, this exemption has created clear loopholes for potential tax evasion. EU authorities found it inconsistent to exempt cryptocurrencies solely because of their technological basis.

DAC8 aims to fill this gap by formally incorporating crypto assets into the tax transparency regime, ensuring transaction data is collected, reported and exchanged in a manner similar to classic financial information. The European Commission has stressed that cryptocurrency does not deserve special exemption from tax enforcement.

Alignment with the OECD Crypto Asset Reporting Framework (CARF)

The EU built DAC8 based on CARF, which was launched in 2023. CARF sets a global benchmark for cryptocurrency transaction reporting, specifying:

• Which crypto assets qualify for reporting

• Which entities must report

• User and transaction details required.

By adopting the CARF model, the EU promotes consistency with international standards by facilitating data exchange with non-EU countries that implement similar rules.

Did you know? Before the introduction of cryptocurrency regulations, several EU tax authorities relied on blockchain analysis firms rather than formal reporting to estimate crypto activity, often producing significantly different numbers for the same market.

DAC8 Scope: Assets and platforms covered

DAC8 focuses on crypto asset service providers (CASPs) operating in the EU. These include centralized exchanges, brokers, custodial wallets and similar intermediaries. The rules cover a wide range of assets, including most cryptocurrencies, stablecoins, tokenized assets and some non-fungible tokens that act more like investment vehicles than regular collectibles. The focus is on portability and investment utilization, not specific labels.

The obligations extend beyond platforms located in the EU. Non-EU providers serving EU users may also have to comply with the rules, highlighting the extraterritorial impact of the directive.

DAC8 schedule and implementation

Adopted in October 2023, DAC8 required transposition into national law by 31 December 2025, and its application began on 1 January 2026. Since the beginning of 2026, there have been delays or infringement notices in some Member States due to incomplete transposition, although the EU expects full enforcement.

Key dates include:

• The platforms started collecting relevant data on January 1, 2026.

• The first reports, covering activities for 2026, will be submitted to national tax authorities in 2027, usually within nine months of the end of the year.

• Tax authorities then automatically exchange data with other EU countries every year.

The Commission has signaled that it expects timely and full implementation. Several countries have received official notices of delays in transposing the rules, highlighting that enforcement will not be optional.

Did you know? Early drafts of the EU’s cryptocurrency tax proposals debated whether self-service wallets could ever be subject to reporting, highlighting how complex it is to regulate decentralized ownership.

Reporting requirements for platforms in DAC8

Under DAC8, CASPs are required to conduct enhanced due diligence and submit detailed information to local tax authorities. This includes user data such as name, address, tax residence and tax identification number (TIN), where available.

Transaction data includes:

• Types of cryptocurrency transactions such as sales, exchanges and transfers

• Gross proceeds from sales

• Transaction dates and values.

Once downloaded, this information is automatically shared with the EU tax authorities. The user’s country of residence receives the relevant data, even if the platform is located in another country.

For DAC8 platforms, it makes cryptocurrency tax reporting a structured, recurring compliance obligation. It is more like financial reporting than ad hoc disclosures.

The impact of DAC8 on cryptocurrency users

One of the most significant changes for cryptocurrency users is the increased transparency of tax reporting under DAC8. National tax authorities can now view transactions carried out on reporting platforms.

This may cause:

• Requests for more detailed information regarding tax residence or identification when setting up an account or updating

• Increased ability of authorities to compare crypto activity with income declared in tax returns

• Easier detection of inconsistencies between reported data and tax returns.

DAC8 does not introduce novel taxes or standardize rates across the EU. Member states retain authority over cryptocurrency tax policy because the directive focuses solely on information exchange. While DAC8 automates data exchange between authorities, users are still required to report their crypto activities through their respective national tax returns.

Compatibility challenges for platforms under DAC8

The implementation of DAC8 requires significant improvements, including precise transaction tracking, tax residency verification and secure data storage. Smaller or less resourceful suppliers may find it complex to meet these obligations alongside MiCA and anti-money laundering regulations.

Failure to comply carries the risk of penalties, including fines for delayed, incomplete or missing reports. Some platforms have indicated that compliance costs may impact where they choose to operate.

Users may also encounter confusion in understanding DAC8 in the context of MiCA. DAC8 deals with tax transparency behind the scenes, while MiCA deals with licensing, investor protections and market behavior.

The two complement each other: DAC8 ensures the flow of tax data when services are activated, while MiCA defines allowable operations. Together they create a comprehensive framework for cryptocurrency supervision.

Some aspects remain unclear under DAC8, such as how decentralized finance (DeFi) fits into the situation where there is no central intermediary to report to. Privacy advocates have raised concerns about the widespread collection and sharing of data, although EU officials note that the General Data Protection Regulation (GDPR) and other data protection laws still apply. Time will tell how these safeguards will work in practice.

Did you know? Similar cryptocurrency tax reporting models are being explored in Asia-Pacific and Latin America, suggesting that EU-style transparency could become the global norm rather than a regional exception.

DAC8 in a broader context

DAC8 is part of a global trend as cryptocurrencies integrate into mainstream finance. Governments around the world increasingly treat it as part of the mainstream financial system rather than as a parallel economy that is viewed with suspicion.

By adopting OECD-aligned standards and enabling cross-border exchanges, the EU emphasizes that cryptocurrencies will face the same transparency requirements as classic assets. For users and platforms in Europe, the period of narrow formal tax supervision is effectively coming to an end.