EU 'DAC8' implementation imminent…mandatory tax reporting for virtual assets from 2026
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- The EU has announced that under the DAC8 regulation, which takes effect on January 1, 2026, virtual asset exchanges and intermediaries must report user and transaction information to tax authorities.
- With the introduction of DAC8, tax authorities will be able to track cross-border virtual asset transactions, increasing the transparency of virtual asset holdings, transactions, and transfers.
- Related firms must update reporting systems and internal control procedures by July 1, 2026, and investors may face freezing or seizure of assets if signs of tax evasion or avoidance are found.
- The article was summarized using an artificial intelligence-based language model.
- Due to the nature of the technology, key content in the text may be excluded or different from the facts.
The European Union (EU) is introducing a new regulatory framework that subjects virtual assets to the same level of tax administration as traditional financial assets. With the amendment to the Directive on Administrative Cooperation, DAC8, taking effect on January 1, 2026, virtual asset exchanges and intermediaries will be required to report user and transaction information to their national tax authorities.
On the 25th (local time), according to Cryptopolitan, the EU confirmed on the 24th that a new tax transparency regulation applying solely to digital assets will come into force on January 1, 2026. The core of DAC8 is to expand the scope of tax administrative cooperation among member states to cover virtual assets and related services.
Under DAC8, companies that provide services such as virtual asset exchanges and intermediaries must collect all users' identity information and transaction records and report them to their domestic tax authorities. Thereafter, national tax authorities will be able to share that information among EU member states. This will enable tax tracing of cross-border virtual asset transactions.
The EU says the measure aims to close the gap in the existing tax system where parts of virtual assets were previously excluded. After DAC8 takes effect, tax authorities are expected to be able to identify virtual asset holdings, transactions, and transfers more clearly, similar to bank accounts or stocks.
DAC8 will be applied alongside the EU's virtual asset regulatory framework, MiCA. If MiCA is a market regulation that governs the licensing of virtual asset service providers, user protection, and business conduct, DAC8 is a system focused on tax reporting and enforcement. MiCA was approved in April 2023.
Ahead of the regulation's implementation, the preparatory burden on virtual asset firms is also increasing. According to the industry, virtual asset service providers must align their reporting systems, internal control procedures, and customer identification procedures with the new standards by July 1, 2026. Failure to comply may result in sanctions under each member state's laws.
The impact on individual investors is also significant. DAC8 allows cooperation among member state tax authorities when signs of tax evasion or avoidance are detected, and it stipulates that virtual assets related to unpaid taxes can be frozen or seized. Such assets may be subject to these measures even if they are held outside the investor's country of residence.
The legal basis for DAC8 was approved by the EU Council of Finance Ministers on May 16, 2023. The directive aims to incorporate virtual asset service providers into the existing Common Reporting Standard (CRS) framework and was designed based on the OECD's Crypto-Asset Reporting Framework (CARF).
The reporting obligation applies from the 2026 tax year, but the first deadline for individual investors to submit tax reports is scheduled for January 31, 2027. The industry expects that once DAC8 is implemented, transparency and tax enforcement for virtual asset transactions within the EU will be significantly strengthened.
