If you thought you could outsmart the tax authorities by investing in cryptocurrencies, you’re in for a surprise. A new European directive, DAC8, will come into force on January 1, 2026. This will make your cryptocurrency holdings completely transparent. Here are the details!
From January 1, 2026, crypto platforms will inform the EU member state in which they are based about who owns which cryptos. This member state will automatically share the information with all other EU member states. All this is neatly regulated in a European directive, DAC8.
So, from 2026, national tax authorities will receive the information, and exchanges between member states are planned to begin in 2027.
Practical…
Starting in 2026, platforms will play a central role and require their users to provide their tax identification numbers (TINs) and proof of tax residency. All possible transactions will be tracked, such as crypto-to-crypto swaps, transfers of crypto assets, even if you move funds to a cold wallet, and retail purchases with your cryptos.
Decentralised Finance (DeFi) projects will still fall outside the scope of DAFC 8 in practice.
What is currently being shared?
First and foremost, of course, the identity of those who are active on one of the platforms, i.e. your name, address, tax residence, and tax number.
Next, the platforms must keep track of the transactions you have made, such as conversions between cryptos and fiat; trades between different crypto coins; transfers received or sent to your external wallet; and so-called “retail payments.”
How you are taxed… does not actually change with the DAFC 8; you cannot stay under the radar anymore. If you do not want to be taxed, or want to be taxed at a low rate, on your crypto profits, and you live in a high-tax country, there are not many solutions.
What now?
The only radical solution to avoid taxation or pay low taxes is to move and change your tax residence. You can choose a country with no taxation, such as the UAE, a country with low taxation, such as Bulgaria, where you are taxed at 10% on your realised profits, or a country where, under certain circumstances, your crypto profits are exempt from taxation, such as Portugal.
Get thoroughly informed and seek guidance. We provide tailor-made solutions. Contact us at info@dehoon-dhp.com because even ChatGPT doesn’t know everything…
