DAC8 and CARF explained

What DAC8 and CARF are

DAC8 crypto reporting is about new rules from the European Union, known as DAC8. This directive expands current regulations on the automatic exchange of tax information among EU countries to now include crypto-assets. Exchanges and certain brokers (and others acting as "crypto-asset service providers") must collect information about their customers and then report those details and transactions to their national tax authority. These requirements now apply throughout the EU.

CARF stands for Crypto-Asset Reporting Framework. It's the OECD's international approach to the same issue. Many countries, both inside and beyond the EU, plan to put CARF into action. Both frameworks share the same goal: give tax authorities access to data on crypto activities, much as banks now report accounts through the common reporting standard.

What crypto providers must collect and report

Providers are usually required to gather key personal details. That includes your name, address, date of birth, a tax identification number, and the country where you pay tax. In addition, they report transactional information for each person: sales, exchanges, certain types of transfers, and sometimes end-of-year balances. This means that many movements of value through your account are visible to the tax authority.

The particular tax office that gets this information, and the exact format or fields reported, can vary depending on local rules. Always check both your own country's requirements and those of the country where your provider is based or licensed.

What users will notice and why it matters

You might find new questions when setting up an account or changing your profile. These could include direct requests for your country of tax residence or a tax identification number, accompanied by routine proof of identity, perhaps a copy of your passport or driver’s license. And some providers may ask you to review and confirm this data at regular intervals.

Importantly, these changes do not influence how much tax you owe. What they do is give the authorities a way to compare your crypto transactions with what you report on your tax return. To avoid issues, make sure you keep accurate, dated records for every trade or transfer, amounts, values, fees. That way, your filings can line up precisely with what the exchange sends to tax authorities. You can find more details in how to get tax reports from crypto exchanges.

Worked example: a sale that is missing from a return

Take an example. You sell crypto worth 2,000 euros on a regulated exchange within the year, but forget to enter the transaction in your tax return. The platform sends its report to the tax authority showing your sale. The authority now has data that does not match your return and may ask about it.

Normally, you would have to fix your return and include the missing details. If you do this before the tax office reaches out, you are likely to find the process far simpler than waiting until after they've begun an inquiry. Options for correction are summarized at how to correct unreported crypto or foreign income.

Frequently asked questions