The Council of the EU adopted, on 17 October 2023, a Directive amending the EU rules on administrative cooperation in the area of taxation (DAC8). The amendments primarily pertain to the reporting and automatic exchange of information on certain revenues from crypto asset transactions and the provision of advance tax rulings for the wealthiest (high net worth) individuals. The Directive aims to strengthen the existing legislative framework by broadening the scope for registration and reporting obligations and improving overall administrative cooperation between tax administrations.
The takeaways:
The Directive was adopted by Member States in the Council, by unanimity. The Directive was subsequently published in the Official Journal on 24 October. It will enter into force on 13 November 2023 (being the twentieth day following that of its publication). Member States will have until 31 December 2025 to transpose the new rules into national law with first application for most provisions from 1 January 2026.
This Directive applies to crypto-asset service providers, whether they are regulated or not (the latter will be required to register in one single Member State for the purpose of complying with their reporting obligations). Crypto assets that can be used for payment or investment purposes are reportable under this Directive unless the equivalent information is reported to a non-EU jurisdiction with an effective qualifying competent authority agreement in place to exchange the information with EU Member States. The meaning of crypto assets for this purpose is very broad and includes crypto assets that have been issued in a decentralised manner, as well as stablecoins, including emoney tokens and certain non-fungible tokens (NFTs).
Observation: Reporting crypto-asset service providers will have to collect, verify and report a range of information on their users. Although the prelims to the Directive state that the administrative burden should be minimised for the industry so that it is able to develop its full potential within the Union, service providers will have a significant amount of work to do.
The automatic exchange of advance cross-border rulings is extended by the Directive to individuals that are said to meet a high-net-worth threshold or that are seeking a residence ruling. This applies generally to rulings issued, amended or renewed after 1 January 2026. However, an exclusion is provided for rulings on taxation at source with regard to non-residents’ income from employment, director’s fees, and pensions, unless the threshold is also met.
Observation: Although said to pertain to high-net-worth individuals, what is relevant is the size of the amount referred to in the ruling rather than the wealth of the taxpayer—where the amount of the transaction or series of transactions involved exceeds EUR 1,500,000 (or the equivalent amount in any other currency).
The application of the provisions incorporated into DAC reporting rules by this or any of the previous versions - DAC 1 through to DAC8—is further strengthened by this Directive.
Observation: While earlier drafts sought to harmonise penalties, the choice of penalties remains within the discretion of Member States, though the penalties chosen should be effective, proportionate and dissuasive.
This eAlert was written by the PwC Network: Will Morris, Edwin Visser (Tax Policy Leadership), Phil Greenfield, Panagiotis Papapanagiotou, Chloe Fox (Tax Policy contributors), Peter Brewin, Jasper van Schijndel, Daniel Dzenkowski (CARF contributors).