DAC8 cryptocurrency reporting mandatory in EU from January 1, 2026, requiring visibility into transactions over 5 years.

DAC8 cryptocurrency reporting mandatory in EU from January 1, 2026, requiring visibility into transactions over 5 years.

The European Union has introduced significant changes to its tax reporting framework, mandating cryptocurrency reporting under DAC 8, effective from January 1, 2026. This directive, known as the Council Directive (EU) 2023/2226, aims to enhance tax transparency and compliance in the crypto-asset market.

Regulatory Context and Timeline

DAC 8 builds upon the European Union's existing framework for administrative cooperation in taxation, with a focus on the automatic exchange of information. It is a response to the rapid growth and complexity of the crypto-asset market. The directive aligns with the Markets in Crypto-Assets (MiCA) regulation, which established a comprehensive EU regulatory framework for crypto-assets [1].

Member states, including Luxembourg, are required to transpose DAC 8 into national law by December 31, 2025, with the first reporting period commencing on January 1, 2026. Luxembourg has already presented a draft law to transpose DAC 8 into its legal framework, with provisions set to align with the directive [1].

Key Components of DAC 8

DAC 8 introduces several measures to ensure transparency and compliance in the crypto-asset market:

1. Due Diligence and Reporting Obligations: Crypto-asset service providers (CASPs) are required to collect and verify users' information, report this information to the competent authority, and ensure automatic exchange of information with the users' country of residence [1].

2. Extension of Common Reporting Standard Scope: DAC 8 extends the scope of the Common Reporting Standard (CRS) to include e-money products and central bank digital currencies, classifying entities holding these assets as reporting financial institutions [1].

Impact on Investment Funds

The directive has significant implications for investment funds engaging with crypto-assets and tokenised funds in Luxembourg. While most funds are unlikely to be classified as CASPs, the extension of CRS reporting obligations introduces additional compliance complexities. Asset managers and fund administrators must assess whether their activities or structures may give rise to new or enhanced reporting requirements under DAC 8 and ensure that appropriate procedures are in place [1].

Conclusion

The introduction of DAC 8 marks a critical step in the EU's effort to enhance tax transparency and compliance in the crypto-asset market. Investment funds and crypto-asset service providers must prepare for the new reporting requirements and ensure compliance to avoid potential penalties and reputational risks.

References

[1] Ogier. (2025). How DAC 8 affects crypto-assets in investment funds. Retrieved from https://www.ogier.com/news-and-insights/insights/how-dac-8-affects-crypto-assets-in-investment-funds/