DAC8 Testing Strategy: How to Validate Your Reporting System

Testing is the critical step between building a DAC8 compliance system and trusting it to produce accurate reports. This article outlines a comprehensive testing strategy.

Testing Levels

A robust DAC8 testing strategy operates at multiple levels:

Unit testing. Test individual components — TIN validation logic for each jurisdiction, transaction classification rules for each transaction type, fair market value calculation methods, and data field mapping from internal formats to XML elements.

Integration testing. Test the flow of data from source systems through the DAC8 processing pipeline to the final XML output. Verify that data transformations are correct, aggregation logic produces accurate results, and all required fields are populated.

End-to-end testing. Simulate the complete annual reporting cycle from data collection through report generation, validation, and submission. Use realistic test data that covers all transaction types, multiple jurisdictions, and edge cases.

Regression testing. After any system changes, verify that existing functionality still works correctly. This is particularly important when updating TIN validation rules or adding support for new jurisdictions.

Test Data

Creating effective test data is crucial. Test data should include users from all EU Member States with realistic TINs, all four transaction types (fiat-to-crypto, crypto-to-crypto, transfer, payment), multiple crypto-assets with different MiCA classifications, edge cases (users with multiple tax residencies, users who changed address during the year, zero-value transactions), and high-volume scenarios to test aggregation performance.

Validation Testing

Test your reports against the XML schema using schema validation tools. Verify compliance with business rules published by your competent authority. Cross-check aggregated amounts against the underlying transaction data. And test the correction process by generating corrections and verifying their format and content.

Conclusion

Thorough testing is the best insurance against reporting errors and rejections. CASPs should allocate sufficient time and resources for testing and should not compress the testing phase to meet implementation deadlines.