EU’s DAC8 Crypto Tax Law Is Now in Force. What It Means for You

Key Takeaways:

• DAC8 took effect on Jan. 1.
• The rules require crypto-asset service providers to collect and report user information and transactions to national tax authorities in detail.
• Exchanges are legally required to identify their users by name, address and tax identification number.
• It means an end to anonymous transactions, analysts say.

The European Union’s new tax transparency law for crypto assets, known as DAC8, took effect on Jan. 1, giving the bloc power to seize or embargo assets linked to unpaid taxes, while negating privacy for individual holders.

DAC8 is the eighth update to the Directive on Administrative Cooperation, the EU’s long-running tax transparency framework, expanding its scope to cover taxation on crypto assets and related service providers.

The rules were first agreed to by EU politicians in May 2023, and member states were required to approve DAC8 into national law by Dec. 31, 2025.

DAC8 covers a range of issues, but primarily requires crypto-asset service providers, including exchanges and brokers, to collect and report user information and transactions to national tax authorities in footnote detail. This data is then automatically shared between EU countries.

Data collection for the year 2026 has already started. Crypto companies have until July 1 to put their houses in order, ensuring they comply with DAC8’s reporting requirements. Non-compliance may result in penalties.

While the EU frames DAC8 as a transparency measure, critics argue the directive is an assault on privacy, a core principle of the crypto sector.

“Tax authorities now have an automated dashboard tracking your digital assets,” Bitcoiner and crypto educator Heidi Chakos, wrote on X (Twitter). “Privacy has never been more important than right now,” she added.

DAC8 could have massive implications for crypto users in and outside of the European Union. Cryptonews spoke to two tech lawyers to find out what the new directive could mean for ordinary crypto investors.

How does DAC8 affect crypto users?

Antonia Eilander, a corporate and tax lawyer with Netherlands-based crypto law firm O2K, said DAC8 “significantly increases tax transparency”, to use the EU’s phrasing, for cryptocurrency users in the 27-member bloc.

Every exchange and service provider is now legally required to identify its users by name, address and tax identification number. Together with your full transaction history, firms must report this information every year to tax authorities, who then exchange the data among themselves in the EU.

“For users, this means that crypto activity is far more likely to be matched against tax returns, even where no fiat cash-out occurs,” Eilander said.

It also means an end to anonymous transactions, according to Yulia Privalova, a lawyer at crypto exchange and depository Asterium.

“Crypto activity on centralized exchanges is now treated in a similar way to traditional banking activity,” Privalova told Cryptonews, adding:

“Users should therefore assume that transactions on regulated platforms are no longer outside the view of regulators … DAC8 makes [it] clear that anonymity on regulated platforms is gradually disappearing.”

She said DAC8 does not require users to take any new actions. Neither does it introduce additional reporting obligations for individuals nor impose taxes automatically. But it “reduces the likelihood that crypto transactions will go unnoticed.”

What will authorities be able to see, and how is this different from before?

DAC8 operates in parallel with the EU’s Markets in Crypto-Assets (MiCA) law, which was passed in April 2023 to regulate how crypto companies get their licenses, protect users and function across the economic bloc.

Both Eilander and Privalova said, under DAC8, tax authorities will receive clearly defined data, including:

• User identification data: as already mentioned, name, address etc., and for individuals, date and place of birth
• Entity data, including information on controlling persons
• The cryptocurrencies people have used in a year
• Purchases of crypto assets with fiat
• Sales of crypto assets for fiat
• Exchanges of one digital asset for another
• Crypto payments for goods and services

The data includes volumes, dates, and types of transactions, Privalova said. But she was quick to point out that, “This is not real-time monitoring but annual reporting provided automatically by platforms.”

Eilander said the EU’s new requirements go beyond earlier reporting models that mainly focused on fiat on- and off-ramps. Although DAC8 covers crypto-to-crypto transactions and transfers “in a standardized, EU-wide format,” the O2K lawyer found “tax residence tricky.”

“Many crypto holders assume it simply follows the jurisdiction of their passport, which is incorrect,” she told Cryptonews. “Under DAC8, reporting is based on tax residence as defined by domestic tax law, not nationality.”