On 10 November 2023, the following countries issued a joint statement regarding efforts to implement a tax reporting framework for crypto assets: Armenia, Australia, Austria, Barbados, Belgium, Belize, Brazil, Bulgaria, Canada, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Netherlands, Norway, Portugal, Romania, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, the United Kingdom, and the United States of America; the Crown Dependencies of Guernsey, Jersey, and Isle of Man; and the United Kingdom’s Overseas Territories of the Cayman Islands and Gibraltar.
In summary, these countries (who play host to active crypto markets) are asking the Organisation for Economic Co-operation and Development (OECD) to continue its efforts to develop and implement a new international standard on automatic exchange of information between tax authorities, based on the OECD publication of 10 October 2022 which contained the OECD Crypto-Asset Reporting Framework (CARF) and amendments to Common Reporting Standard (CRS). This OECD framework was endorsed by the G20 in August 2022.
The CARF consists of rules and commentary which set out: (i) the scope of crypto assets to be covered; (ii) the entities and individuals subject to data collection and reporting requirements; (iii) the transactions subject to reporting, as well as the information to be reported in respect of such transactions; and (iv) the due diligence procedures to identify crypto asset users and controlling persons, and to determine the relevant tax jurisdictions for reporting and exchange purposes.
The joint statement aims to speed up the process of creating the CARF, swiftly transposing the CARF into domestic law and activating exchange agreements in time for exchanges to commence by 2027, subject to national legislative procedures as applicable. Other jurisdictions are invited to join the signatories of the joint statement with a view to enhancing the global system of automatic information exchange which leaves no hiding places for tax evasion. This should further improve the ability of local tax authorities to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes.
In Europe, the CARF is already being developed in the form of the Directive on Administrative Cooperation (DAC8). On 16 May 2023, the Economic and Financial Affairs Council (ECOFIN) (i.e. the EU27 Finance Ministers) reached a general approach on the 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 CRS. The DAC8 is based on the OECD framework. It is expected that the DAC8, including the CARF rules, will come into effect on 1 January 2026 with first reporting due by 31 January 2027.