Council Directive (EU) 2023/2226 of 17 October 2023 amending Directive 2011/16/EU on administrative cooperation in the field of taxation

New Council Directive (EU) 2023/2226, also referred to as DAC (Directive on Administrative Cooperation) 8, was published in the Official Journal (OJ) of the EU. The key purpose of the new directive is to bring crypto-assets and e-money under the remit of reportable financial transactions under DAC 1 (Directive 2011/16/EU) and to include new provisions for rulings concerning high-net-worth individuals in the advance tax rulings requirements under same directive. The ultimate objective is to enable member states to adequately and consistently assess income derived from crypto-assets and e-money and subsequent taxes due by crypto-asset service providers (CASPs) and their users. It shall be noted at this point that most crypto-asset service providers and operators are currently not considered „financial institutions“ as defined in DAC 1 and thus are not required to provide financial (account) data to tax administrators. Moreover, most crypto-assets are not considered „funds held in depository accounts“ and thus are exempt from the reporting requirement of financial institutions under DAC 1.
(1) The information exchange: Specifically, the new DAC 8 modifies DAC 1 by extending the scope of automatic exchange of information under the DAC to include information that will have to be reported by CASPs on transactions (transfer or exchange) of crypto-assets and e-money on accounts of reportable crypto-asset users. Such information includes, for example,
– the name of the type of the reportable crypto-asset;
– the aggregate gross amount paid or received, the aggregate number of units, and the number of transactions in respect of acquisitions or sales against fiat currencies; or
– the aggregate gross amount paid or received, the aggregate number of units, and the number of transactions in respect of acquisitions or sales of crypto-assets besides the typical user account information such as
– the name of the account holder;
– its place of residency;
– its place and date of birth (if applicable); and
– its Tax Identification Number (TIN).
The information listed above shall be reported annually in the calendar year following the year to which the information relates. The first information shall be reported for the relevant calendar year or other appropriate reporting period as from January 1, 2026.
(2) Reportable users or persons: According to DAC 8, a reportable user is a crypto-asset user who resides in any member state which may be a legal person or natural person. User thereby means that the (legal) person engages in crypto-asset transactions. Certain individuals or entities are generally excluded from being treated as reportable persons such as entities with stocks regularly traded on securities markets, governmental entities, international organizations, central banks, or certain financial institutions.
(3) Procedures to be followed to identify crypto-asset users and thus accounts: Already in the onboarding of crypto-asset users will CASPs be required to collect certain (tax) information of (potential) customers. This includes the name and residency of the client, date of birth, place of birth, TIN, ect. The information must be collected via a self-certification by clients. For users that are entities, certain additional information will have to be collected. These procedures are intended to help CASPs determine the tax residency and status of crypto-asset users and their controlling persons (if so), thereby facilitating compliance with relevant tax regulations and reporting obligations. It shall be noted in this context that CASPs can rely on third-parties to perform the self-certification for the purposes of meeting their due diligence requirements. CASPs that are also financial institutions may also use self-certifications collected for other tax purposes if they meet the specified requirements.
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The new DAC 8 further defines the procedure to be followed by member states to automatically exchange the information reported by crypto-asset service providers to the competent authorities. Furthermore, the regulation extends the categories of income subject to mandatory automatic exchange of information between the member states to include „Non-custodial dividend income“ and „income from life insurance products not covered by other Union legal instruments“. Finally, DAC 8 also also requires the exchange of advance cross-border rulings between member states as far as they concern transactions worth €1.500.000 (please note the change to the proposed version of the directive where the limit was set at €1.000.000). This is to ensure that member states are aware of rules and regulations in member states concerning the taxation of high-net worth individuals.
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Please note: as the above summary only describes the key provisions of the new tax cooperation directive, please refer to the original legal document for more detailed, comprehensive information.