DAC8 and Automatic Exchange of Information: How Data Flows Between Member States

The automatic exchange of information is the mechanism through which DAC8 data reaches the tax authorities that need it. Understanding this flow helps CASPs appreciate the downstream impact of their reports.

The Exchange Process

The DAC8 data exchange follows a structured process. The CASP submits its annual report to the tax authority of the Member State where it is registered. The receiving tax authority validates the report and processes the data. The tax authority extracts information about users who are tax residents of other Member States. This information is transmitted to each relevant Member State through the EU's secure exchange network. The receiving Member States process the data and integrate it into their domestic enforcement systems.

Technical Infrastructure

The EU's automatic exchange infrastructure is built on the Common Communication Network (CCN), a secure data transmission system operated by the European Commission. All DAC information exchanges — including DAC2 (CRS), DAC6, DAC7, and now DAC8 — use this infrastructure.

The system ensures secure transmission with encryption and access controls, standardized data formats through the XML schema, delivery confirmation and error handling, and audit trails for all data exchanges.

What Tax Authorities Do with the Data

Receiving tax authorities use DAC8 data to pre-populate tax returns with known crypto-asset income, identify taxpayers who have not declared crypto income, trigger audit or investigation proceedings for significant discrepancies, and build risk profiles for crypto-active taxpayers.

Timing

The first automatic exchange of DAC8 data is expected by September 30, 2027, covering the 2026 reporting period. This means there is a gap of several months between the CASP's report submission and the actual exchange of data between Member States.

Conclusion

The automatic exchange mechanism ensures that DAC8 data reaches the tax authorities where it is most needed — the jurisdictions where users are tax resident. CASPs should understand that their reports will be scrutinized not only by their home tax authority but by all Member States whose residents use their platform.