Crypto-Asset Reporting Framework & amendments to CRS


Over the past few years, new technologies have left their mark on the world of finance. The Crypto industry has changed investment and payment practices around the world. This has already led to new Anti Money Laundering rules for virtual wallet providers by the FATF in 2019 and the EU Markets in crypto asset Directive.  However, the fight against tax evasion and avoidance is also what prompted the latest amendment to the Directive on Administrative Cooperation, also known as DAC8. On 16 May 2023, the EU Economic and Financial Affairs Council (ECOFIN) reached a general approach on DAC8, implementing new tax transparency requirements for all service providers facilitating transactions in crypto-currencies in the EU market. These crypto-asset services providers will be confronted with new client due diligence and reporting requirements. DAC8 was adopted on 17 October 2023 by the Council of Ministers and it will need to be implemented by all EU Member States. 

With DAC8, the EU tax administrations will receive the information they need to ensure that taxes are paid for gains made in trading or investing crypto-assets, as they would for any other financial assets. 

The timing agreed to enforce DAC 8, as per 2026, is largely aligned with the OECD crypto-assets reporting framework. The OECD members in favour of the crypto-assets reporting framework, are likely expected to follow a similar calendar.

Next to crypto, DAC8 also provides an update to the already existing Common Reporting Standard legislation and exchange of cross border rulings, further strengthening the EU exchange of (tax) information framework. This again confirms the importance of the automatic exchange of information implemented via the various DAC amendments. In addition, DAC8  aims to further close loopholes and improve administrative cooperation among EU Member States in support of fair taxation.

On 16 May 2023, the ECOFIN (the EU27 Finance Ministers) reached a general approach  on DAC8, to bring Crypto-Asset service providers in scope of the tax automatic exchange of information reporting framework and to enhance the data quality and usability of the Common Reporting Standard (CRS or DAC2). This Directive is based on the OECD publication of 10 October 2022 which contained the OECD Crypto-Asset Reporting Framework (CARF) and amendments to CRS. This OECD framework was endorsed by the G20 in August 2022. Additionally, with DAC8 the EU also introduces further improvements to the Directive on Administrative Cooperation  which cover, amongst others, the automatic exchange of information on non-custodial dividends (DAC1) and exchange of certain advance cross-border rulings regarding natural persons (DAC3). 

These frameworks have been developed on the presumption that crypto-assets could be used to undermine the existing international tax transparency framework, including CRS. Both CARF and DAC8 broadly require digital market intermediaries, such as crypto-asset exchanges and wallet providers, to apply due diligence-procedures to identify their customers and to annually report customer’s aggregate exchanges and transfers to their respective tax administration.

The amendments  to CRS seek to bring new digital financial products within the scope of CRS to ensure a level playing field with CARF, and aims to improve the quality and usability of CRS reporting. New digital financial products such as electronic money products, Central Bank Digital Currencies and certain investments in crypto-assets would specifically be captured by CRS and not necessarily by CARF. 

The DAC8, including the CARF rules, will come into effect on 1 January 2026 with first reporting due by 31 January 2027. The amendments to the CRS, DAC1 and DAC3, approved by the OECD on 26 August 2022, should -in principle- be effective on 1 January 2024.

  • The ECOFIN 16 May 2023 DAC8 approved text can be found here.

  • The OECD 10 October 2022 publication can be found here.

The Crypto-Asset Reporting Framework

The CARF has been designed as a response to the challenges that the growing market of Crypto-Assets pose for tax administrations’ visibility on taxpayer information and taxpayer compliance. This challenge is twofold. First, Crypto-Assets can be issued, recorded, transferred and stored in a decentralised manner without intervention of traditional financial intermediaries or central administrators. Second, the new set of intermediaries such as crypto-asset exchanges and wallet providers may be subject to limited regulatory oversight. 

CARF is designed to ensure collection and exchange of information on these transactions in Crypto-Assets in a similar manner as CRS. In the EU, CARF is first transposed by DAC8 into EU Directive 2011/16/EU and subsequently in domestic law. This is to ensure a consistent implementation within the EU member states. DAC8 builds on top of the EU MiCA regulatory framework for the Crypto market and the Transfer of Funds Regulation (‘TFR’). The EU scope of DAC8 includes Crypto-Asset service providers within and outside the EU. Crypto-Asset service providers are (initially) only in scope of DAC8 if they service EU resident individual or legal entity customers.In order to seek alignment with MiCA, DAC8 uses similar definitions for Crypto asset Providers and Crypto albeit that the definitions under DAC8 could be interpreted more broadly. 

The OECD framework is not complete yet. The OECD is conducting further work on the automatic exchange of information between jurisdictions and the technical solutions to support the exchange of information. Additionally, the OECD will undertake further work to provide guidance and to elaborate on the rules, including the rules for reporting on Crypto-Assets exchanged for goods or services and the limitations to the definition of Relevant Crypto-Assets. It is expected that further work conducted by the OECD will also be transposed into the EU implementation of the framework.

Who needs to report?

Persons that as a business effect Crypto-Asset transactions or make available a platform for such transactions for or on behalf of a customer are considered Reporting Crypto-Asset Service Providers subject to customer due diligence and annual reporting obligations on Crypto-Assets. 

The terms such as ‘Crypto-Asset’ and ‘Specified Electronic Money Product’ are intentionally defined to capture a broad variety of digital asset types, including future asset types that function in a similar manner. Examples of digital financial assets captured by CARF include stablecoins, derivatives issued as a crypto-asset, and certain non-fungible tokens (NFTs). 

The amendments to the CRS model also target these types of products where traditional financial intermediaries are involved, whereas CARF targets the transactions where no such intermediaries are involved.

CARF provides exceptions for specific Crypto-Asset types that are deemed to have low tax compliance risks or that are to be captured under the expanded scope of the CRS. Crypto-Assets which cannot be used for payment or investment purposes are considered such a low tax compliance risk, while Central Bank Digital Currencies and Specified Electronic Money Products are to be captured under the expanded scope of the CRS.

Is there a registration requirement?

On top of the OECD CARF model, EU DAC8 also includes a registration requirement for Crypto-Asset service providers that are not subject to EU regulatory requirements. This registration requirement applies to both EU and non-EU Crypto-Asset service providers with EU customers. These Crypto-Asset service providers are required to register and report in a single EU member state. This is similar to what we have seen for DAC7. EU regulated Crypto-Asset service providers will instead be included on a publicly available European Securities and Markets Authority (ESMA) list of authorised Crypto-Asset service providers. Any Crypto-Asset service providers that omitted to comply with EU regulatory requirements, which should have complied with these requirements, will be included on an ESMA blacklist. 

What needs to be reported?

Transactions are to be reported on an aggregated basis by type of Crypto-Asset and are to include both Crypto-to-Crypto and Crypto-Asset-to-official currency transactions. Crypto-Asset transfers in exchange for goods or services may also be reportable. The reporting data should indicate in an official currency the value of a Crypto-Asset at acquisition and the gross proceeds value upon disposal of such Crypto-Asset. For Crypto-to-Crypto transactions both the value of the disposed as well as the acquired Crypto-Asset would have to be reported in official currency. Additionally, the report should distinguish between outward and inward transactions and indicate the applicable transfer type (e.g. forks, airdrops). 

The customer due diligence procedures build on the self-certification based requirement in CRS and on existing AML/KYC obligations from the 2012 FATF Recommendations. The consistency between CARF and CRS should minimise the burden for Reporting Crypto-Asset Services Providers, especially when also subject to CRS. Similarly as CRS, CARF provides for a phase-in period to perform the due diligence procedures on existing customers. 

Where needs to be reported?

CARF includes a broad set of nexus rules. The rules range from a Reporting Crypto-Asset Service Provider being subject to reporting requirements of a jurisdiction based on tax residence in such a jurisdiction to merely affecting relevant transactions through a branch in a jurisdiction. To avoid duplicative reporting CARF prescribes a hierarchy in the nexus rules and provides specific rules when the same nexus rule applies to multiple jurisdictions. DAC8 limits the application of CARF to EU Crypto-Asset Service Providers and non-EU EU Crypto-Asset Service Providers with EU customers, but leaves room for scope extensions and cooperation with other jurisdictions outside the EU.


Amendments to the Common Reporting Standard

Next to the OECD CARF Framework, the OECDs first comprehensive review of the CRS also resulted in a number of amendments to the CRS model and the Commentary. These amendments are fully taken onboard in the DAC8. The amendments aim to:

  1. Bring new digital financial products within the CRS to ensure a level-playing field between new digital money products and traditional bank and other CRS reportable accounts. 

  2. Improve the quality and usability of existing CRS reporting. 

Covering new digital financial products

The OECD amendments bring digital money products, including e.g. coverage of derivatives referencing crypto-assets and investment entities investing in crypto-assets in scope of the existing CRS framework by broadening the Financial Institution, Financial Account and Financial Asset definitions to also cover so-called ‘Specified Electronic Money Products’, ‘Central Bank Digital Currencies’ and ‘Relevant Crypto Assets'. Additionally, the OECD introduces a new category of Excluded Accounts for certain digital money products with a limited monetary value. These new terms are consistent with the terms used in CARF and intend to capture a broad variety of digital assets. 

The OECD acknowledges that certain assets may simultaneously be subject to reporting as Crypto-Assets under the CARF and Financial Assets under CRS. To address duplicate reporting, the OECD proposes that where the disposal of such assets may result in duplicative reporting, the gross proceeds upon such disposal is to only be reported under CARF.

Amendments to improve quality and usability of CRS reporting

The OECD amendments relate to a variety of existing sections in CRS with ranging impact, including: 

  • Section I: reporting requirements - new reportable data elements such as Controlling Person roles, Preexisting or New Account indicator, indicator whether a valid self-certification has been obtained, data on whether an account is jointly held, the number of joint account holders and type of Financial account indicator. These additional data elements are to enable tax authorities to better contextualise the information received.

  • Section VI: Due diligence requirements - rules to ensure AML/KYC procedures that are applied for New Entity accounts are substantially similar to the 2012 FATF recommendations.

  • Sections II - VII: Due diligence requirements - inclusion of a fall-back procedure for exceptional cases to temporarily determine residence of a New Account Holder and/or Controlling Person based on the due diligence rules of a Preexisting Account Holder. 

  • Section VIII(C)(17)(e): Definition of Excluded Account - qualification of certain capital contribution accounts as Excluded Accounts for a maximum of 12 months.

  • Non-Reporting Financial Institution category for Qualified Non-Profit Entities: optional new category for genuine charities that (i) meet all of the requirements of an Active NFE pursuant to section VIII.D(9)(h) of CRS and (ii) is subject to adequate verification requirements and obtained confirmation on its status from the tax administration in the jurisdiction where it would otherwise be subject to reporting as an Investment Entity.

  • Commentary to the Depository Institution definition: inclusion of entities that are merely licensed to engage in certain banking activities, but are not actually so engaged.

  • Commentary to the Investment Entity definition: clarification that, in line with the FATF recommendations, investors of funds can be considered “customers” and that the funds themselves can be considered to conduct activities “as a business”. 

  • Commentary to dual-resident account-holders: requirement to report account holders with multiple tax residencies as tax resident in all these tax jurisdictions, regardless of tie-breaker rules in applicable tax conventions.

  • Addition to due diligence procedures: allow Financial Institutions to meet due diligence requirements using Government Verification Services (“GVS”), such as a direct confirmation in the form of an IT-token or other unique identifiers from local tax administrations. 

  • Commentary on Controlling Persons of publicly traded entities: acknowledgement of FATF exclusion from Controlling Person disclosure.

  • Integration of CBI/RBI guidance within the CRS: reiteration in explanatory guidance that Financial Institutions should take into account OECD published information of certain potentially high-risk citizenship and residence by investment (CBI/RBI) schemes when determining whether it has a reason to know that a self-certification or Documentary evidence is incorrect or unreliable. When encountering such regimes, FIs should raise additional questions to determine whether the account holder should be considered tax resident in (also) another CRS-reporting jurisdiction.


    Moreover, to increase the usability of the CRS, the OECD has incorporated some aspects of  the online FAQs to the CRS’ commentary and has included similar transitional measures as included at the start of CRS to allow financial institutions time to implement the revised model.

Further updates from DAC8 to the Directive on Administrative Cooperation

In addition to the CARF and CRS rules, the EU DAC8 includes further updates to the automatic exchange of information framework. Some updates primarily impact EU member state governments, where other updates also impact intermediaries and taxpayers. Some of the key updates:

  • Update to DAC1 - Reporting on non-custodial dividend income (Article 1(2) amending Article 8(1) Directive 2011/16/EU): Non-custodial dividend income is added to the categories of income and capital that are subject to exchange of information by EU member state governments as per Article 8(1) of the Directive.

  • Update to DAC3 - exchange of certain cross-border rulings regarding natural persons (Article 1(3) amending Article 8a(4) Directive 2011/16/EU): Article 8a of the Directive extends the scope of the reporting obligations for cross-border rulings that involve one or more natural persons where the amount of the transaction - or series of transactions- exceeds EUR 1.500.000 or where the cross-border ruling exclusively determines whether a person is or is not resident for tax purposes in the Member State issuing the ruling. This is applicable for rulings amended or renewed after 1 January 2026. Rulings on taxation at source with regard to non-residents’ income from employment, director’s fees or pensions shall not be exchanged.  

  • Taxpayer identification number verification tool (Article 1(10) adding paragraph(8) to Article 21, Directive 2011/16/EU): DAC8 indicates that EU Member States are required to exchange taxpayer identification numbers (TIN). For this purpose, the European Commission will also develop a tool for EU Member States to electronically verify the correctness of exchanged TINs.
  • Non-EU CASP due diligence and CARF as a minimum standard: The general implementation of a switch off mechanism for non-EU crypto asset providers to perform due diligence procedures when subject to a reporting system tantamount to DAC8 - that was included in the December 2022 proposal - has been deleted. However, this mechanism can be activated for avoiding double reporting. In this context, OECD’s CARF is officially observed as an international minimum standard.
  • Use of information exchanged for other purposes (Article 1(7) adding subparagraph to Article 16(2), Directive 2011/16/EU): When an EU Member State intends to use data for non-tax purposes it is generally required to first consult the sending EU Member State. DAC8 removes this consultation requirement for a specific list of situations, such as when an EU Member State intends to use the data to combat financing of terrorism or for sanctions purposes. When an EU Member State intends to use data for non-tax purposes it is generally required to first consult the sending EU Member State. DAC8 proposes to remove this consultation requirement for a specific list of situations, such as when an EU Member State intends to use the data to combat financing of terrorism or for sanctions purposes. 


    As a final note, the availability of the Central Directory for DAC8 information has been postponed until 31 December 2026. The purpose of this platform is to provide a secure electronic channel to exchange, store and share information on cross-border rulings, advanced pricing arrangements as well as reportable DAC6 cross-border arrangements.

What do the CARF and CRS rules mean for your organisation?

So far, crypto has not been in scope of CRS and tax transparency reporting. With the now released framework of the EU and the OECD, this will change. Therefore not only banks but also other financial market participants, in particular in the area of crypto services, will be impacted by these new regulations.

In the EU specifically, these new tax information reporting rules come on top of the Markets in Crypto Assets (MiCA) regulation to be introduced per 2024. Given the multitude of regulations, understanding the rules and the consequences should not be performed per regulations, but should be performed taking all these regulations in mind. 

Should you have any questions on the impact for your organisation, feel free to contact any of our experts.

Contact us

Robert Jan Meindersma

Robert Jan Meindersma

Senior Director, PwC Netherlands

Tel: +31 (0)68 360 84 41

Jasper van Schijndel

Jasper van Schijndel

Partner, PwC Netherlands

Tel: +31 (0)63 072 54 25

Ralph van Melick

Ralph van Melick

Senior Manager, PwC Netherlands

Tel: +31 (0)62 002 41 67

Roderick Hermans

Manager, PwC Netherlands

Tel: +31 (0)64 844 59 32

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