The European Union is preparing to implement a new measure that significantly tightens its oversight of the crypto asset market. The long-debated European Union Digital Tax Transparency Regulation (DAC8), adopted by the Union, will come into effect on January 1, 2026. With this regulation, crypto exchanges, brokerage firms, and crypto asset service providers will be obligated to report comprehensive data on their users and transactions to national tax authorities.
In an official announcement on December 24th, it was emphasized that the new transparency rules only cover digital assets and create a fundamental change in existing crypto review methods. DAC8 expands the scope of the Directive that already regulates information sharing on tax matters between member states, including crypto assets in the system. Thus, crypto transactions will be placed within a reporting framework similar to traditional financial instruments such as bank accounts and securities.
What do the new rules in the EU cover?
According to the new rules, crypto exchanges and brokers will be required to collect details such as user credentials, transaction history, transfers, and wallet movements and transmit them to their respective national tax authorities. This data will then be shared with other EU member states. The aim is to monitor cross-border crypto activities more transparently and reduce the risk of tax evasion.
DAC8 has also brought about significant debate within the crypto ecosystem. While some sector representatives find the regulation too harsh, EU sources argue that this step fills a long-standing gap. It was previously pointed out that some crypto activities remained outside standard tax reporting systems, and the new regulation aims to make digital asset transactions clearly traceable.
On the other hand, DAC8 works together with MiCA, another key EU regulation for crypto, but focuses on different areas. MiCA, approved in April 2023, regulates issues such as the licensing of crypto companies, the protection of customer assets, and market behavior; while DAC8 mainly covers tax compliance and reporting obligations. In short, MiCA aims for market regulation, while DAC8 aims for financial transparency.
The transition process to the new regime has also become clear. Crypto companies are required to update all their systems, from reporting infrastructure and internal control mechanisms to customer verification processes, by July 1, 2026. After this date, companies that fail to fulfill their obligations will face penalties according to the national legislation of the relevant country. The situation is also quite clear for individual investors. Tax authorities can cooperate with their counterparts in other EU countries in cases of possible tax evasion or underreporting. DAC8 allows for the freezing or seizure of crypto assets linked to unpaid taxes. Moreover, this authority will be valid even if the assets are held outside the investor's country of residence. The legal basis of DAC8 rests on the Administrative Cooperation Directive, approved by the Council of the 27 EU member states on May 16, 2023. This framework aims to integrate crypto asset service providers into the existing tax reporting system. The regulation is also designed to be compatible with the Crypto Asset Reporting Framework (CARF) and the Common Reporting Standard (CRS) developed by the OECD. According to authorities, the uncontrolled growth of the cryptocurrency market posed a significant obstacle to global tax transparency. With DAC8 and CARF, this sector is planned to be brought under stricter control. While tax years will be subject to reporting from 2026 onwards, individual investors will be required to submit their initial declarations by January 31, 2027. These dates are seen as the beginning of a new era for cryptocurrency taxation in the EU.
