DAC8 Obligations for Non-EU Platforms Serving EU Clients

Non-EU CASPs that serve EU-resident clients cannot avoid DAC8 obligations by being incorporated outside the EU. This article examines the specific requirements and practical implications for these platforms.

The Extraterritorial Reach of DAC8

DAC8 applies to any CASP that provides reportable services to users who are tax residents of EU Member States, regardless of where the CASP is established. This extraterritorial reach is designed to prevent CASPs from avoiding reporting obligations simply by locating outside the EU.

Registration Requirement

Non-EU CASPs serving EU clients may be required to register in an EU Member State specifically for DAC8 reporting purposes. The registration must be made in a single Member State, typically the one where the CASP has the most EU users. Once registered, the CASP reports to that Member State's tax authority, which then exchanges the information with other Member States.

This registration requirement is separate from MiCA authorization. A non-EU CASP may be required to register for DAC8 reporting even if it does not hold a MiCA license — though without MiCA authorization, it may not be legally permitted to provide services to EU clients.

Practical Challenges

Non-EU CASPs face several practical challenges in DAC8 compliance, including identifying which of their users are EU tax residents, collecting TINs and self-certifications from EU users, understanding the specific transposition requirements of their registration Member State, and submitting reports to a foreign tax authority using the required XML format.

Enforcement Mechanisms

The EU's enforcement options against non-compliant non-EU CASPs are more limited than for EU-based entities. However, coordination between MiCA and DAC8 enforcement means that non-EU CASPs seeking EU market access through MiCA authorization will need to demonstrate DAC8 compliance as part of the authorization process.

Conclusion

Non-EU CASPs serving EU clients must take DAC8 seriously. Registration, data collection, and reporting obligations apply regardless of the CASP's location, and failure to comply may affect their ability to access the EU market.