Source: Cryptonews Original Title: EU’s DAC8 crypto tax rules bring self-custody withdrawals into scope Original Link:

Background on EU DAC8 Implementation

Cryptocurrency firms operating in the European Union began collecting tax data on January 1, 2026, under the bloc’s new DAC8 rules, prompting debate over privacy implications for digital asset users.

Regulatory Framework

The regulations, implemented through Directive (EU) 2023/2226, require exchanges and service providers to report user information to national tax authorities, including names, tax identification numbers, and transaction histories, according to the European Commission framework.

The DAC8 launch has triggered discussion among industry observers regarding compliance requirements. Some commentators have characterized the regulations as bringing structured reporting requirements to cryptocurrency transactions, though analysts note the rules introduce phased implementation rather than immediate enforcement measures.

Compliance Timeline and Obligations

Under the framework, digital asset service providers must collect customer data throughout 2026 and submit the first full-year reports by 2027. The regulations focus on building systems and gathering data in 2026, with larger enforcement effects expected later once reports can be compared across borders.

The rules apply to all EU residents and cover:

• Crypto-to-fiat trades
• Crypto-to-crypto exchanges
• Transfers to addresses not managed by the same provider

Critically, the definition of transfers includes withdrawals to self-custody wallets and unhosted destinations, bringing these transactions within the reporting scope.

Account Suspension and TIN Requirements

Platforms may be required to freeze accounts or block transactions if users do not provide their Tax Identification Number (TIN). However, account blocking follows a structured process: two reminders and a 60-day grace period, rather than an immediate freeze.

Economic Impact Assessment

The European Commission estimates DAC8 could generate approximately €1.7 billion in additional annual revenue from crypto transactions, while the European Parliament cites a broader range of €1 billion to €2.4 billion per year.

For service providers:

• One-time setup expenses: approximately €259 million
• Recurring annual costs: roughly €22.6 million to €24 million

Regulatory Approach

The European Commission’s impact assessment describes a balanced approach, with aggregated data allowed in parts of the report while standardized identity and account fields enable cross-border matching. The framework increases tax visibility rather than banning self-custody arrangements.

Reporting occurs annually, with activity starting at a regulated provider—including withdrawals to self-custody wallets—now falling within the regulatory reporting scope.