How DAC 8 affects crypto assets in investment funds

Asset managers and fund administrators engaging with crypto-assets and tokenised funds in Luxembourg should assess their activities or structures in relation to new reporting requirements in line with DAC 8.

In this briefing, Ogier tax partner Aurélie Clementz, tax counsel Hadrien Brémon and tax associate Muriel Jarosz give some background on DAC 8 and its impact on investment funds.

DAC 8 overview

The European Union has progressively expanded its framework for administrative cooperation in the field of taxation. The eighth amendment to the Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation, originally known as DAC 1, marks a significant step. It introduces new rules for the automatic exchange of information - particularly targeting crypto-assets. This latest amendment, the Council Directive (EU) 2023/2226 of 17 October 2023, is commonly referred to as DAC 8.

DAC 8 was developed in response to the rapid growth and increasing complexity of the crypto-asset market. Crypto-assets, by their very nature, are decentralised, making it difficult for tax authorities to track transactions and ensure tax compliance.

Regulatory context and timeline

DAC 8 follows the adoption in 2023 of Regulation (EU) 2023/1114 (MiCA) of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, which established the EU regulatory framework for crypto-assets. Notably, DAC 8 aligns its key definitions and terminology with MiCA to ensure coherence across the EU’s regulatory landscape.

DAC 8 act as the European counterpart to OECD Crypto Asset Reporting Framework (CARF). CARF facilitates the automatic exchange of tax relevant information on crypto-assets at the international level and has amended the OECD Common Reporting Standard (OECD CRS).

Member States, including Luxembourg, are required to transpose DAC 8 into national law by 31 December 2025, with the first reporting period starting on 1 January 2026. On 29 July 2025, the Luxembourg government presented a new draft law no.8592 (the Draft Law) to parliament aiming to transpose DAC 8 into the Luxembourg legal framework. The main provisions of the Draft Law correspond to those set out in DAC 8, as described below.

Key components of DAC 8

Operating in parallel with CARF, DAC 8 introduces several measures.

New due diligence procedures and reporting obligations for crypto-asset service providers (CASP)

DAC 8 introduces a three-step compliance process for CASPs:

• Step 1 – due diligence procedure: CASPs are required to collect and verify the crypto-assets users' information in accordance with the due diligence procedures defined in DAC 8
• Step 2 – reporting obligations: CASPs must report information of crypto-assets users to the competent authority of the member state where the CASP is established or registered
• Step 3 – automatic exchange of information: The competent authority receiving the information must automatically transmit it to the corresponding authority in the country where the reportable crypto-asset user resides, through automatic exchange of information

Extension of Common Reporting Standard scope

DAC 8 also extends the scope of the Council Directive 2014/107/EU of 9 December 2014 amending DAC 1 regarding mandatory automatic exchange of information in the field of taxation, commonly referred to as DAC 2. DAC 2 introduced the CRS in the EU legislation.

DAC 8 revises in particular the definitions of "Depository Institution" and "Depository Account" to incorporate the concepts of e-money products and central bank digital currencies. This is reflecting the latest amendments to the OECD CRS, as included in CARF.

This means that an entity holding e-money products or central bank digital currencies could be classified as a reporting financial institution and must therefore comply with CRS reporting obligations.

Impact on investment funds

The rapid growth of investment funds engaging with crypto-assets and tokenised funds in Luxembourg raises questions regarding the application of DAC 8. While most funds should not be classified as CASPs unless they provide crypto-asset services, the extension of CRS reporting obligations, including the integration of tokenised assets into the CRS reporting regime, introduces additional compliance complexities.

It is imperative for asset managers and fund administrators to assess whether their activities or structures may give rise to new or enhanced reporting requirements under DAC 8, and to ensure that procedures are in place to address the evolving tax transparency landscape.

How Ogier can help

By extending due diligence and reporting requirements in relation to crypto-assets, DAC 8 closes a significant gap left by earlier directives.

If you have any questions or require further clarification in relation to DAC 8, reach out to our tax team experts, which have a significant expertise in crypto assets, investment funds tax structuring and tax compliance. using the contact details below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice