DAC8: Investor’s Guide to EU Crypto Tax Rules

The Directive on Administrative Cooperation (DAC8) introduces stringent new tax reporting requirements for cryptocurrency. 

In this guide, we’ll break down everything EU taxpayers and businesses need to know about DAC8. We’ll also share a few tips to stay compliant with tax regulations! 

How does DAC8 change tax reporting? 

DAC8 introduces new tax reporting requirements for cryptocurrency service providers — in other words, platforms that allow users to buy, sell, and trade crypto-assets. These regulations will come into effect on January 1, 2026. 

Cryptocurrency service providers — regardless of their size or where they are based — will now be obligated to report transactions involving EU clients to the respective tax authorities of member states. This includes companies like Coinbase, Bitstamp, Binance, and other crypto service providers. 

Mandatory crypto-asset provider reporting 

Crypto-asset service providers are now required to report transactions from clients who reside in the European Union to relevant tax authorities. Users will be required to provide the following information to service providers upon signup. 

• Legal name
• Legal address
• Date of birth 
• The EU state that the customer resides in 
• Tax Identification Number 

Service providers will report taxpayers’ transactions on an aggregated basis — including buys, sells, and transfers. This includes the following information. 

• The type of cryptocurrency
• Amount of cryptocurrency 
• Gross amount paid and received 
• Fair market value at time of transaction 
• Number of transactions 

Minimum non-compliance penalty

The EU will establish a minimum penalty for serious non-compliant behavior — for example, not reporting your cryptocurrency taxes after multiple warnings from authorities. 

What is the purpose of DAC8? 

The primary motivation behind DAC8 is to combat potential tax evasion and fraud in the crypto sector. The European Commission estimated that these tax compliance measures could increase tax revenue by €1.4 billion annually (though it’s unclear how this number was calculated). 

DAC8 highlights the measures that governments all over the world are taking to crack down on crypto tax fraud. The United States will be implementing similar mandatory 1099 reporting for cryptocurrency exchanges starting in the 2025 tax year. 

How can I stay compliant with DAC8? 

It’s likely that DAC8 may cause tax reporting issues if you haven’t kept accurate records of your crypto transactions. Because wallet-to-wallet transfers are so common, investors often have trouble calculating capital gains and losses in the case of disposals. 

Consider the following scenario: 

- Henry buys €1,000 of BTC on Exchange A. 

- He transfers his BTC to a cold wallet. 

- Henry sells his BTC for €1,500 on Exchange B. 

- Exchange B reports Henry’s €1,500 sale. 

To accurately calculate his capital gains and losses, Henry needs a record of the original cost basis of his cryptocurrency. Because Exchange B does not have records of Henry’s original purchase, the exchange cannot provide him with a comprehensive tax form. 

If Henry hasn’t kept records of his transactions, he may be required to recognize his entire €1,500 of proceeds as a capital gain. 

To avoid situations like these, it’s important to keep detailed records of your cryptocurrency transactions. This should include the following information: 

• The date you received your crypto 
• The date you disposed of your crypto 
• The fair market value of your crypto at the time of receipt 
• The fair market value of your crypto at the time of disposal `
• Fees related to acquiring/disposing of your crypto 

Keeping track of this information manually can be difficult. Alternatively, you can use crypto tax software like CoinLedger to automatically keep track of your crypto transactions across all of your blockchains and exchanges! 

How do other countries around the world tax cryptocurrencies?

The EU is not alone in its strengthening of crypto tax enforcement mechanisms. As cryptocurrencies and digital assets have grown in popularity, so have government regulations surrounding the asset. 

Income derived from trading and earning crypto is taxable in most countries around the world. For a complete country-by-country breakdown of crypto tax treatment, refer to our international crypto tax guides. 

In Conclusion

While DAC8 aims to make the tax process more transparent and combat fraud, it also places a responsibility on taxpayers to stay informed and compliant. That means that it’s more important than ever to keep detailed records of your crypto transactions.