What Is DAC8? A Complete Guide to the EU's Crypto Tax Reporting Directive

The European Union's Directive on Administrative Cooperation 8 (DAC8) represents a landmark shift in how crypto-asset transactions are reported and taxed across EU Member States. Adopted by the Council of the European Union on October 17, 2023, DAC8 extends the existing EU framework for automatic exchange of tax information to cover crypto-assets for the first time.

Background: Why DAC8 Was Introduced

The rapid growth of the crypto-asset market created a significant tax transparency gap within the EU. While traditional financial assets — bank accounts, dividends, insurance products — were already covered by earlier versions of the Directive on Administrative Cooperation (DAC1 through DAC7), crypto-assets remained largely invisible to tax authorities.

The European Commission estimated that billions of euros in taxable gains from crypto-asset transactions went unreported each year. Without a harmonized reporting framework, EU Member States had no reliable mechanism to track cross-border crypto activity or verify whether their tax residents were accurately declaring crypto-related income.

DAC8 was designed to close this gap by requiring crypto-asset service providers (CASPs) to collect and report detailed information about their users' transactions to the relevant tax authorities.

Scope of DAC8

DAC8 applies to a broad range of crypto-asset service providers operating within the EU or serving EU-resident clients. The directive covers:

Reporting entities include any CASP that is authorized, registered, or otherwise required to be licensed under the EU's Markets in Crypto-Assets Regulation (MiCA), as well as certain operators of decentralized platforms that qualify under the directive's extended definitions.

Reportable crypto-assets encompass any digital representation of value or rights that can be transferred and stored electronically using distributed ledger technology. This includes major cryptocurrencies like Bitcoin and Ethereum, stablecoins, utility tokens, and certain NFTs that are used for payment or investment purposes.

Reportable transactions include exchanges between crypto-assets and fiat currencies, exchanges between different crypto-assets, transfers of crypto-assets, and any retail payment transactions involving crypto-assets.

Key Obligations for CASPs

Under DAC8, reporting CASPs must perform several critical compliance functions:

Customer due diligence. CASPs must collect and verify the identity of their users, including their full name, date of birth, address, Tax Identification Number (TIN), and tax residency. For entity users, additional information such as the legal entity's registration number and the identity of its controlling persons is required.

Self-certification. CASPs must obtain a self-certification from each user confirming their tax residency. This self-certification must be validated against the information held by the CASP, including through reasonableness checks and, where appropriate, verification against official documentation.

Transaction reporting. CASPs must report aggregate transaction data for each reportable user, broken down by type of transaction (fiat-to-crypto, crypto-to-crypto, transfer) and by type of crypto-asset. Reports must include the total gross amount, number of transactions, and fair market value at the time of each transaction.

Data transmission. Reports must be submitted in a standardized XML format to the tax authority of the Member State where the CASP is registered. That tax authority will then automatically exchange the information with the tax authorities of other Member States where the reported users are tax residents.

Timeline and Deadlines

DAC8 follows a structured implementation timeline:

December 31, 2025: Member States must transpose DAC8 into national law by adopting the necessary legislative, regulatory, and administrative provisions.

January 1, 2026: The directive takes effect. CASPs must begin collecting data and performing due diligence on new users from this date. Existing users must be reviewed and brought into compliance through a look-back process.

January 31, 2027 (at the latest): First reports covering the 2026 calendar year must be submitted to the relevant tax authorities.

Ongoing annual reporting: Each subsequent year, CASPs must submit reports covering the prior calendar year.

Relationship with MiCA

DAC8 is closely intertwined with the EU's Markets in Crypto-Assets Regulation (MiCA), which establishes a comprehensive licensing framework for CASPs across the EU. While MiCA focuses on consumer protection, market integrity, and financial stability, DAC8 specifically targets tax transparency.

In practice, any CASP that holds a MiCA license will automatically fall within the scope of DAC8. The two frameworks share definitions of crypto-assets and service providers, creating a unified regulatory environment for the EU crypto market.

Relationship with the OECD's CARF

DAC8 was developed in close alignment with the OECD's Crypto-Asset Reporting Framework (CARF), which serves as the global standard for crypto-asset tax reporting. The EU directive incorporates the core principles of CARF while adapting them to the specific legal and institutional context of the European Union.

Key differences between DAC8 and CARF include the scope of covered assets (DAC8 follows MiCA definitions), the enforcement mechanisms (DAC8 relies on EU administrative cooperation structures), and the penalties for non-compliance (which vary by Member State under DAC8, whereas CARF leaves enforcement entirely to individual jurisdictions).

Impact on the Crypto Industry

DAC8 represents a fundamental change in the operating environment for crypto-asset service providers in the EU. Compliance will require significant investments in technology, processes, and personnel. CASPs that have not yet implemented robust Know Your Customer (KYC) processes, TIN collection mechanisms, and automated reporting systems will need to do so before the directive takes effect.

For smaller CASPs, the compliance burden may be particularly challenging, as they may lack the internal resources and infrastructure to meet DAC8's requirements without external support.

However, DAC8 also presents opportunities. CASPs that achieve early compliance can position themselves as trusted, regulated service providers — a potential competitive advantage in a market where regulatory credibility is increasingly valued by both retail and institutional users.

Conclusion

DAC8 marks the EU's definitive entry into crypto-asset tax reporting. For CASPs operating in or serving EU clients, understanding and preparing for DAC8 is no longer optional — it is a legal requirement that will shape the future of the European crypto market. Early preparation, thorough gap analysis, and structured implementation are essential to meeting the directive's requirements on time and avoiding the penalties that Member States will impose for non-compliance.