The Political Journey of DAC8: From Proposal to Adoption

DAC8 did not emerge overnight. Its path from concept to adopted legislation reflects years of policy debate, international coordination, and political negotiation within the EU institutions. Understanding this political journey provides insight into the priorities and compromises that shaped the final directive.

The Precursors: Growing Pressure for Crypto Tax Transparency

The political momentum behind DAC8 began building long before the formal legislative process. Several key developments set the stage.

In 2018 and 2019, the European Parliament adopted multiple resolutions calling for greater transparency in the crypto-asset market, including specific recommendations for tax reporting requirements. The Parliament's committees on economic and monetary affairs and on financial crime repeatedly highlighted the risks of tax evasion through unregulated crypto transactions.

Simultaneously, the OECD began its work on the Crypto-Asset Reporting Framework (CARF), with active participation from EU Member States. The G20's endorsement of crypto-asset tax transparency standards in 2021 added further impetus.

At the national level, several EU Member States had already begun implementing or proposing their own crypto-asset reporting requirements, creating a patchwork of divergent rules that threatened the functioning of the single market.

The European Commission's Proposal: December 2022

On December 8, 2022, the European Commission published its proposal for DAC8 as part of a broader package of measures to modernize EU tax rules. The proposal was presented by Commissioner Paolo Gentiloni, who framed it as a necessary complement to MiCA.

The Commission's impact assessment identified several key problems: an estimated annual tax gap of several billion euros attributable to unreported crypto-asset income, the inability of national tax authorities to effectively track cross-border crypto transactions, the risk of regulatory arbitrage if Member States adopted divergent national reporting rules, and the need to align with the OECD's CARF to maintain the EU's leadership in international tax cooperation.

The Commission's proposal closely followed the CARF model but incorporated EU-specific adaptations, including the link to MiCA definitions, the use of the existing DAC infrastructure for information exchange, and the extension of the directive's scope beyond pure crypto-assets to include certain e-money tokens and other digital representations of value.

Council Negotiations: January to October 2023

The Council of the European Union, where Member States negotiate the final text of EU directives, began examining the Commission's proposal in early 2023. The negotiations took place primarily within the Council's Working Party on Tax Questions and the Economic and Financial Affairs (ECOFIN) Council.

Several key issues dominated the negotiations. The first concerned the scope of covered crypto-assets. Some Member States argued for a broader scope that would capture all digital assets regardless of their classification under MiCA, while others preferred a narrower approach limited to assets that pose the greatest tax evasion risks. The final text adopted a middle ground, using MiCA definitions as the baseline while including provisions that allow for future expansion.

The second issue was the treatment of non-EU CASPs. Member States with large fintech sectors argued for strict obligations on non-EU platforms serving EU users, while others raised concerns about enforceability and extraterritorial reach. The compromise required non-EU CASPs to register in a single EU Member State for reporting purposes, without requiring full MiCA authorization.

The third debate centered on the implementation timeline. The Commission originally proposed a January 1, 2026, start date with first reporting in 2027. Some Member States requested additional time, citing the complexity of transposition and the need for CASPs to prepare. The final text maintained the original timeline, reflecting the political urgency of closing the crypto tax gap.

Penalties were another point of contention. While all Member States agreed that non-compliance should carry meaningful sanctions, there was no consensus on harmonized penalty levels. The final text left penalty determination to individual Member States, consistent with the approach taken in earlier DAC amendments.

European Parliament Consultation

Although DAC directives are adopted under a consultation procedure (rather than the ordinary legislative procedure), the European Parliament's opinion carried political weight. The Parliament's Committee on Economic and Monetary Affairs (ECON) issued its opinion in September 2023, broadly supporting the Commission's proposal while calling for stronger enforcement provisions, greater attention to data protection safeguards, more ambitious scope expansion to capture DeFi activities, and enhanced coordination with non-EU jurisdictions implementing CARF.

While the Council was not legally bound by the Parliament's opinion, several of its recommendations were reflected in the final text, particularly regarding data protection safeguards and the future review clause that could expand the directive's scope to DeFi.

Formal Adoption: October 17, 2023

The ECOFIN Council formally adopted DAC8 on October 17, 2023, by unanimous agreement. The directive was published in the Official Journal of the European Union on October 24, 2023, as Council Directive (EU) 2023/2226.

In his statement following the adoption, Commissioner Gentiloni described DAC8 as closing one of the last major loopholes in the EU's tax transparency framework and positioning the EU at the forefront of global efforts to ensure that crypto-assets are taxed fairly and transparently.

Post-Adoption: Transposition and Implementation

Following adoption, the focus shifted to transposition. Member States have until December 31, 2025, to adopt national legislation implementing DAC8. The European Commission has been working with Member States through the DAC Expert Group to develop implementation guidance, common interpretations of key provisions, and technical specifications for the XML reporting format.

As of early 2026, the transposition process is at varying stages across the EU, with some Member States having already adopted national legislation and others still in the drafting phase. This uneven progress creates uncertainty for CASPs that operate across multiple jurisdictions and need to understand the specific requirements in each Member State.

The Political Significance of DAC8

DAC8's adoption represents more than a technical extension of the DAC framework. It signals the EU's determination to regulate the crypto-asset market comprehensively, covering not only consumer protection and market integrity (through MiCA) but also tax compliance. It demonstrates the EU's ability to translate international standards (CARF) into binding legislation more quickly than most other jurisdictions, reinforcing its role as a regulatory pace-setter.

For the crypto industry, DAC8's political journey carries an important message: tax transparency is not a temporary political priority but a structural feature of the EU's regulatory approach to crypto-assets. CASPs should expect the framework to deepen and expand over time, not to be rolled back.

Conclusion

DAC8's political journey from proposal to adoption took less than a year — an unusually fast timeline for EU tax legislation, reflecting the strong political consensus behind crypto-asset tax transparency. Understanding this political context helps CASPs appreciate that DAC8 is backed by deep institutional commitment and that compliance should be treated as a long-term strategic investment, not a short-term regulatory burden.