EU Expands Crypto-Asset Tax Reporting with DAC8 Directive

The European Commission and the EU Council have formulated Directive (EU) 2023/2226, also known as DAC8, incorporating crypto-assets into the EU tax framework. Starting January 2026, crypto transactions, including those involving self-custody wallets, will become reportable.

DAC8 aims to extend automatic exchange of information (AEOI) to crypto-assets and e-money and applies from 1 January 2026.

The decision affects crypto-asset service providers operating in the EU, requiring them to report all transactions involving withdrawals to self-custody wallets. These measures are designed to track crypto activities, increasing tax transparency in the EU.

DAC8 is expected to generate €1–2.4 billion annually in additional tax revenue for EU member states. It entails an estimated €259 million in implementation costs and up to €24 million yearly maintenance expenses for service providers.

With DAC8 in force, self-custody isn’t banned, but withdrawals to unhosted wallets will become reportable events. This regulatory change aims to provide tax authorities a clearer view of assets beyond the regulated perimeter.

Service providers must adopt new KYC measures, including collecting Tax Identification Numbers (TINs). Non-compliant users may face account restrictions, ensuring the integrity of DAC8’s implementation by January 2026.

Affected crypto assets include BTC, ETH, stablecoins, DeFi tokens, and NFTs, regarded as “crypto-assets” under DAC8. Users might explore non-custodial options to avoid centralized scrutiny, potentially altering EU crypto market dynamics.

DAC8 aligns with global frameworks like the OECD CARF and FATF Travel Rule, suggesting initial compliance struggles but eventual market adaptation, following patterns observed with past regulatory initiatives.

The adoption of DAC8 highlights the EU’s intention to strengthen crypto-market oversight while mandating cross-border transaction transparency, significantly impacting strategies of service providers, investors, and policymakers.