EU's New Crypto Tax Rules: What It Means for Web3 Developers

The Council of the European Union has approved new rules that allow tax officials to see people's cryptocurrency details. This step is to stop fraud and tax cheats and will change how Web3 developers work.

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These rules were suggested last year and aim to stop people from hiding their money using digital coins. Even though most of the talks about these rules were private, all EU countries agreed to them.

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The rules cover more than just usual cryptocurrencies. They also cover other digital money like stablecoins, NFTs, DeFi tokens, and money made from staking cryptocurrency. A document that CoinDesk saw in May explained these points.

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These rules are called the Eighth Directive on Administrative Cooperation or DAC8 for short. According to DAC8, companies dealing in cryptocurrencies have to share details about their customers. Tax officials in different countries will then share these details with each other. This new rule has also added rules for banks related to electronic money and CBDCs (central bank digital currencies).

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Henrik Paulander, who was involved in these changes, said, "DAC8 was needed for several reasons. Crypto assets are relatively new technology. So it was important to give Member States the tools to get the information that they need."

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Henrik also highlighted the importance of sharing details about cryptocurrencies. He said, "There was no exchange of information before DAC8. It's important even more for crypto assets than for other assets because if you are trading your crypto assets on platforms, this platform will, in most cases, not be in your country of residence."

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The European Commission, which suggests new EU laws, mentioned that DAC8 rules fit well with other big rules like the Markets in Crypto Assets Regulation (MiCA) and rules to stop money laundering.

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For Web3 developers, this means they have to be more open and follow more rules. Using blockchain technology to create new things will need to consider these rules. As these rules are used more, businesses that use cryptocurrencies should be ready to share details of their transactions from customers living in the EU.

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Henrik summed up the results of DAC8 by saying, "Yes, we are proud and happy with the result. I always think that there are still things left to do, and this is part of the challenge."

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To finish, these new rules show the EU's plan to have laws that fit with the growing digital world. This means Web3 developers and blockchain businesses should be ready to be more open and follow these new practices.

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