COMMISSION STAFF WORKING DOCUMENT Subsidiary Grid Accompanying the document Proposal for a Council Directive amending Directive 2011/16/EU on administrative cooperation in the field of taxation
Date: 2022-12-08
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: European tax cooperation, administrative cooperation, exchange of information, fraud, provision of services, tax avoidance, tax evasion, virtual currency

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  EN 

   EUROPEAN COMMISSION  Brussels, 8.12.2022  SWD(2022) 400 final  COMMISSION STAFF WORKING DOCUMENT Subsidiary Grid Accompanying the document Proposal for a Council Directive amending Directive 2011/16/EU on administrative cooperation in the field of taxation {COM(2022) 707 final} - {SEC(2022) 438 final} - {SWD(2022) 401 final} - {SWD(2022) 402 final}  
 
 
1. Can the Union act? What is the legal basis and competence of the Unions’ intended action?  

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative?  

Article  115  of  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU)  is  the  legal  base  for 
legislative initiatives in the field of direct taxation. Furthermore, given that the information exchanged 
under  the  Directive  2011/16/EU  (hereinafter  DAC)  can  be  also  used  in  the  field  of  VAT  and  other 
indirect taxes, Article 113 of the TFEU is also included as a legal base.  

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature?  

In the case of direct taxation as far as the proposal relates to the establishment or functioning of the 
internal market, the Union’s competence is shared.  

2. Subsidiarity Principle: Why should the EU act?  

2.1 Does the proposal fulfil the procedural requirements of Protocol No. 21:  

-  Has there been a wide consultation before proposing the act?  
- 

Is there a detailed statement with qualitative and, where possible, quantitative indicators 
allowing an appraisal of whether the action can best be achieved at Union level?  

1 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN   

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There has been an extensive consultation process while preparing the current proposal. As the proposed 
legislation amends existing provisions of the DAC, the “evaluate principle” was applied. 

• 

Evaluations of existing legislation  

In  2019,  the  Commission  evaluated  the  effectiveness,  efficiency,  relevance,  coherence  and 
additional value of the Directive on administrative cooperation in the field of direct taxation. 
The  evaluation  concluded  that  cooperation  brings  about  important  benefits,  yet  there  is  still 
scope  for  improvement.  It  demonstrated  that  differences  persist  in  the  way  Member  States 
exploit the available tools of administrative cooperation. The information exchanged could be 
used  more  efficiently  and  the  benefits  of  cooperation  could  be  analysed  in  a  more 
comprehensive manner.  

In 2021, the European Court of Auditors (ECA) published its Special Report 03/2021 on the 
exchange of tax information in the EU. The ECA examined, firstly, how the Commission is 
monitoring  the  implementation  and  performance  of  the  tax  information  exchange  system;  
secondly, how Member States are using the information exchanged and how they are measuring 
the effectiveness of the system. The ECA found that the exchange of tax information between 
Member States was not yet sufficient to ensure fair and effective taxation throughout the internal 
market.  

Building  upon  these  findings,  this  legislative  proposal  presents  a  limited  set  of  specific 
interventions to improve the functioning of administrative cooperation. 

Furthermore, the Commission prepared an impact assessment to support this proposal. In this context 
the following consultation activities were carried out:  

• 

Stakeholder consultations  

On 10 March 2021 the European Commission launched a public consultation to gather feedback 
on  the  way  forward  for  EU  action  on  strengthening rules  on  administrative  cooperation  and 
expanding  the exchange  of  information  to  crypto  in  the  field  of taxation.  Stakeholders  were 
asked to provide their feedback on the basis of a number of questions. In total, 33 respondents 
provided  their  feedback.  In  addition,  the  European  Commission  carried  out  targeted 
consultations with national administrations and private stakeholders. There was a consensus on 
the  benefits  of  having  a  standardised  EU  legal  framework  for  gathering  and  exchanging 
information regarding crypto-assets, as compared to several disparate national reporting rules.  

• 

Consultation of Member States  

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The European Commission carried out a targeted consultations in November 2020 and March 
2021 by organising Working Party IV meetings where Member States had the opportunity to 
debate a possible proposal for an amendment to the DAC. The meetings focused on the reporting 
and exchange of information on income earned through crypto-assets. It also looked at how to 
improve the compliance framework  in DAC.  

Overall, broad support was received for a possible EU initiative for the reporting and exchange 
of information on proceeds obtained by crypto-assets users.  

•  

Outcome of consultations  

Both public and targeted consultations seem to converge on the challenges that the new rules on 
reporting  and  exchange  of  information  regarding  crypto-assets  should  aim  to  tackle: 
underreporting  in  the  crypto-assets  EU  market  and  inefficiencies  in  the  current  EU 
administrative cooperation framework, such as in the field of compliance measures.   

The explanatory memorandum and the impact assessment include a section on the principle of 
subsidiarity, for details see question 2.2 below.  

2.2  Does  the  explanatory  memorandum  (and  any  impact  assessment)  accompanying  the 
Commission’s proposal contain an adequate justification regarding the conformity with the 
principle of subsidiarity?  

The  proposal  fully  observes  the  principle  of  subsidiarity  as  set  out  in  Article  5  TFEU.  It 
addresses administrative cooperation in the field of taxation. The proposal involves extending 
the scope of automatic exchange of information to crypto-asset service providers, hereinafter 
CASPs, placing an obligation on them to report on the transactions performed by users resident 
for tax purposes in the EU through their platforms. It also includes certain modifications in the 
rules  to  improve  the  functioning  of  the  existing  provisions  that  deal  with  cross-border 
cooperation between tax administrations from different Member States. 

The increased use of crypto-assets as a source of important capital gains makes it necessary to 
set an EU framework to allow tax authorities to exchange the essential information to cross-
check the correctness of taxpayers' declarations. While some Member States have imposed a 
reporting obligation in their national law and/or through administrative guidance, experience 
shows that national provisions against tax evasion cannot be fully effective, especially when the 
targeted activities are mainly carried out cross-border. The application of existing provisions of 
the DAC concerning compliance has shown significant discrepancies among Member States. 
For example, while some Member States have set high penalties for non-compliance others have 
no  minimum  amounts  of  penalties.  Further,  certain  provisions  have  proved  insufficient  for 
addressing  the  needs  of  tax  administrations  in  cooperating  with  other  Member  State(s)  over 
time.  

Legal  certainty  and  clarity  can  only  be  ensured  by  addressing  these  inefficiencies  through  a 
single set of rules that apply to all Member States. The internal market needs a robust mechanism 
to address these loopholes in a uniform fashion and rectify existing distortions by ensuring that 
tax authorities receive appropriate information on a timely basis.  

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Therefore,  the  EU  is  better  placed  than  individual  Member  States  to  address  the  problems 
identified  and  ensure  the  effectiveness  and  completeness  of  the  system  for  the  exchange  of 
information and administrative cooperation. First, it will ensure a consistent application of the 
rules  across  the  EU.  Second,  all  CASPs  in  scope  will  be  subject  to  the  same  reporting 
requirements. Third, the reporting will be accompanied with exchange of information and, as 
such, enable the tax administrations to obtain a comprehensive set of information regarding the 
capital gains obtained through crypto-asset transactions.  

2.3  Based  on  the  answers  to  the  questions  below,  can  the  objectives  of  the  proposed  action  be 

achieved sufficiently by the Member States acting alone (necessity for EU action)?  

(a)  Are  there  significant/appreciable  transnational/cross-border  aspects  to  the  problems  being 

tackled? Have these been quantified?  

One of the main problems which needs to be addressed with this initiative is under-reporting (or 
lack of reporting overall) of the proceeds obtained by crypto-asset users. At present, a sizeable 
amount  of  capital  gains  obtained  via  the  services  CASPs  offer  remains  unknown  to  tax 
administrations  and  thus  untaxed.  The  initiative  is  meant  to  improve  the  ability  of  Member 
States to detect and counter cross-border tax avoidance and tax evasion.  

The  distribution  of  capital  gains  across  the  Member  States  is  uneven.  Member  States  have 
different approaches when it comes to taxing realised capital gains, with some Member States 
not taxing them at all. Our estimates applying a 25% uniform tax rate on total capital gains from 
all crypto-assets in EU would reach around 1.7 Billion EUR. In 2020, the total realised capital 
gains by EU citizens from Bitcoin amounted to EUR 3.6 billion according to a study performed 
by A. Thiemann (2021).2,3 The employed data had been tracked by Chainalysis (a blockchain 
data platform) that is considered a trusted source of information.4 We have calculated all capital 
gains  concerning  all  types  of  crypto-assets  within  Europe  by  assuming  parts  from  the  study 
mentioned above. 

(b) Would national action or the absence of the EU level action conflict with core objectives of the 

Treaty5 or significantly damage the interests of other Member States?  

National actions could potentially damage the interest of other Member States. National actions 
would  not  be  sufficient  to  address  the  problem  in  its  entirety  as  the  legislative  proposal 
introduces  not  only  a  reporting  requirement  for  CASPs  with  respect  to  the  transactions 
performed  by  its  users,  but  also the  mandatory  exchange  of this  information  in cross-border 
scenarios.    

(c) To what extent do Member States have the ability or possibility to enact appropriate measures?  

2 Thiemann (2021). Cryptocurrencies: An empirical view from a tax perspective, JRC Working Papers on Taxation and Structural Reforms, No 12.  
3 The analysis includes capital losses, but the aggregate outcome is positive (i.e. capital gains). 
4 Chainalysis has been commissioned by various governments, research agencies, financial institutions and insurance and cybersecurity companies worldwide, but even 
them experience limitations in collecting data (e.g. the use of VPN networks that hide the true location of transacting parties). 
5 https://europa.eu/european-union/about-eu/eu-in-brief_en   

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Member  States  can  individually  impose  domestic  reporting  measures.  However,  in  most 
Member  States,  there  is  no  legislation  for  self-initiated  third  party  reporting  whatsoever.  In 
addition,  there  are  uncertainties  as  to  whether  reporting  obligations  based  on  domestic 
legislation  can  be  enforced  to  CASPs  that  are  neither  registered  nor  have  a  permanent 
establishment in the regulating jurisdiction.   
The  Member  States  cannot  unilaterally  impose  the  appropriate  measures  for  exchange  of 
information  and  administrative  cooperation.  Therefore,  the  nature  of  the  measure  is  not 
compatible with unilateral action at national level, which would not as such lead to  

achievement of its objectives.   

(d) How does the problem and its causes (e.g. negative externalities, spill-over effects) vary across 

the national, regional and local levels of the EU?  

In  case  tax  administrations  decided  to  act  on  their  own  to  try  to  tackle  this  problem  by 
introducing  national  reporting  requirements  for  CASPs  regarding  crypto-assets  transactions, 
there would be fragmentation that may result in unnecessary burden on CASPs. The business 
environment becomes more complicated, with various national reporting models, which entails 
higher compliance and administrative costs, without sufficiently tackling the issue.  

(e) Is the problem widespread across the EU or limited to a few Member States?  

The problem related to the lack of reporting is widespread across the EU as the users are located 
and active in all Member States. Given the flexible and cross-border nature of the subject matter, 
this problem affects all other Member States, which cannot efficiently cooperate or exchange 
information amongst themselves.  

(f) Are Member States overstretched in achieving the objectives of the planned measure?  

As  the  proposed  legislation  seeks  to  improve  the  existing  provisions  on  administrative 
cooperation and exchange of information, it is expected that the Member State will implement 
the proposed measures by building upon existing tools and systems.  
The  proposed  legislation  adds  a  reporting  requirement  for  information  on  crypto-asset 
transactions performed through CASPs. Building upon existing tools and making those more 
efficient while, at the same time, standardising reporting obligations on crypto-asset transactions 
performed through  CASPs, does not overburden the Member States.   

(g) How do the views/preferred courses of action of national, regional and local authorities differ 

across the EU?  

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All  Member  States  agreed  that  the  setting  of  a  new  reporting  framework  for  crypto-assets 
transactions should be addressed via an amendment of Directive 2011/16/EU. A broad support 
was also provided for a possible EU initiative for enhancing some parts of the DAC including 
the  clarification  of  the  compliance  framework  of  the  Directive,  but  also  clarifying  rules 
regarding e-money.  

2.4 Based on the answer to the questions below, can the objectives of the proposed action be better 

achieved at Union level by reason of scale or effects of that action (EU added value)?  

(a) Are there clear benefits from EU level action?   

An action at the level of the EU will bring an added value, as compared to individual Member 
State initiatives in the field. First, it will ensure a consistent application of the rules across the  

EU. Second, all CASPs in scope will be subject to the same reporting requirements. Third, the 
reporting  will  be  accompanied  with  exchange  of  information  and,  as  such,  enable  the  tax 
administrations  to  obtain  a  comprehensive  set  of  information  regarding  the  capital  gains 
obtained through cross-border transactions of crypto-assets. 

(b) Are there economies of scale? Can the objectives be met more efficiently at EU level (larger 

benefits per unit cost)? Will the functioning of the internal market be improved?  

The initiative aims at ensuring a fair and consistent functioning of the internal market, where 
everyone  pays  its  fair  share  of  tax.  Lack  of  a  level  playing  field  and  different  reporting 
requirements imposed by Member States at national level may distort the market allocation of 
services  provided  by  CASPs.  By  imposing  a  reporting  requirement  on  all  CASPs,  the 
transactional information of EU users will be reported to tax administrations creating a level 
playing field for all CASPs and traditional financial institutions.  

(c) What are the benefits in replacing different national policies and rules with a more homogenous 

policy approach?  

It is crucial to define the administrative cooperation standard and rules in a homogenous way. 
This  will  ensure  consistent  application  across  the  EU  and  enable  an  efficient  administrative 
cooperation and exchange of information framework. 

Having a harmonized reporting requirement will create a simplified reporting system for the 
CASPs, thus reducing their administrative burden,  and at the same time, ensure reporting of 
information on transaction of crypto-assets. The exchange of this information amongst Member 
States  will  help  them  to  reduce  tax  evasion,  tax  avoidance  and  tax  fraud,  leading  to  better 
safeguarding their revenues.    

(d) Do the benefits of EU-level action outweigh the loss of competence of the Member States and 
the local and regional authorities (beyond the costs and benefits of acting at national, regional 
and local levels)?  

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Proceeds obtained through the transactions of crypto-assets are currently under-reported. This 
issue is  even  more  acute when  there is  a cross-border element  within  the transaction.  Better 
reporting and exchange of information should therefore have a positive impact on the revenues 
collected by tax administrations. The estimated benefits in terms of the collection of tax revenue 
and improved administrative cooperation resulting from an EU-level action outweigh the loss 
of competence of the Member States and the local and regional authorities.   

(e) Will there be improved legal clarity for those having to implement the legislation?  

The purpose of improving the existing provisions of the DAC is to provide legal clarity both for 
tax administrations and taxpayers. The standardised reporting of crypto-asset transactions will 
provide legal clarity because CASPs will have to comply with the same standard across the EU, 
as defined in the DAC. Besides, the proposal includes clarification of rules regarding e-money 
that will also improve legal clarity.  

3.  Proportionality: How the EU should act  

3.1  Does  the  explanatory  memorandum  (and  any  impact  assessment)  accompanying  the 
Commission’s proposal contain an adequate justification regarding the proportionality of the 
proposal  and  a  statement  allowing  appraisal  of  the  compliance  of  the  proposal  with  the 
principle of proportionality?  

The proposal consists of improving existing provisions of the Directive and extends the scope of 
automatic exchanges to certain specific information reported by CASPs. The envisaged action does 
not go beyond what is necessary to achieve the objective of exchanges of information and more 
broadly, administrative cooperation. Considering that the identified distortions in the functioning 
of the internal market usually expand beyond the borders of a single Member State, EU common 
rules represent the minimum necessary for tackling the problems in an effective manner.  
An EU approach to tax transparency on crypto-assets appears to be the best solution in order to 
avoid  a  patchwork  of  reporting  requirements  unilaterally  implemented  by  some  or  all  Member 
States. The information needs to reach the Member State where the income and revenues are due 
to be taxed. Nevertheless, the information is often likely to be held by intermediaries located in 
another Member State or even in third countries. The envisaged action does not go beyond what is 
necessary  to achieve  the  objective  of  reporting  and  exchange  of information  and  more  broadly, 
administrative  cooperation.  Considering  that  the  identified  distortions  in  the  functioning  of  the 
internal  market  usually  expand  beyond  the  borders  of  a single  Member  State,  the  proposed  EU 
common rules represent the minimum necessary for tackling the problems in an effective manner.   

Thus, the proposed rules contribute to a clearer, consistent and effective application of the DAC 
leading to better ways for achieving its objectives. The envisaged obligation of CASPs to report on 
the crypto-asset transactions of EU users offers a workable solution against tax evasion through the 
use of mechanisms for the exchange of information. In this vein, one can claim that the proposed 
initiative represents a proportionate answer to the identified inconsistencies in the DAC and also 
aims to tackle the problem of tax evasion.  

3.2  Based  on  the  answers  to  the  questions  below  and  information  available  from  any  impact 
assessment,  the  explanatory  memorandum  or  other  sources,  is  the  proposed  action  an 
appropriate way to achieve the intended objectives?  

(a) Is the initiative limited to those aspects that Member States cannot achieve satisfactorily on their 
own, and where the Union can do better?  

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The  initiative  is  limited  to  add  an  EU-wide  reporting  obligation  combined  with  mandatory 
automatic  exchange  of  information  among  Member  States  concerning  crypto-assets.  National 
measures,  when  in  force,  have  proved  insufficient  for  addressing  the  identified  problem.  The 
initiative  also  clarifies  and  improves  some  provisions  of  the  DAC,  such  as  the  compliance 
framework. The initiative does not cover aspects on how Member States should tax capital gains 
earned through crypto-asset transactions. 

(b) Is the form of Union action (choice of instrument) justified, as simple as possible, and coherent 
with the satisfactory achievement of, and ensuring compliance with the objectives pursued (e.g. 
choice  between  regulation,  (framework)  directive,  recommendation,  or  alternative  regulatory 
methods such as co-legislation, etc.)?  

The  policy  intervention  in  the  form  of  a  directive  ensures  consistency  and  clarity  in  the  most 
effective and simple way possible. It is also proportional to achieve  the pursued objectives. The 
evidence collected shows that the regulatory option is the most appropriate way for meeting the 
objectives  of  EU  action.  The  status  quo  or  baseline  scenario  is  the  least  effective,  efficient  or 
coherent option. Differently from the baseline scenario, an EU mandatory common standard would 
ensure that all EU tax administrations have the same tools for administrative cooperation and access 
to the same type of data. In other words, an EU regulatory action would put all tax authorities on 
an equal footing. This also allows for the automatic exchange of information at the EU level on the 
basis of common standards and specifications.   

(c) Does the Union action leave as much scope for national decision as possible while achieving 
satisfactorily  the  objectives  set?  (e.g.  is  it  possible  to  limit  the  European  action  to  minimum 
standards or use a less stringent policy instrument or approach?)  

The proposal is limited to imposing minimum standards and the rules necessary to achieve the set 
objectives. The selected instrument is a directive, the adoption of which requires unanimity in the 
Council.  

(d) Does the initiative create financial or administrative cost for the Union, national governments, 
regional or local authorities, economic operators or citizens? Are these costs commensurate with 
the objective to be achieved? 

The  initiative  will  create  administrative  costs  that  will  be  fully  compensated  with  benefits  tax 
authorities will obtain when running the new reporting and exchange of information framework. 
There will be costs for the Union as well as for national authorities to adapt current IT systems. 
There will also be costs for CASPs that will need to comply with due diligence rules, although 
mostly they already had to implement due to AML provisions. The costs incurred on CASPs are 
based  on  a  range  of  assumptions  and  have  been  estimated  based  on  those  already  borne  by 
traditional financial institutions that are already subject to the obligations of the DAC. 

(e) While respecting the Union law, have special circumstances applying in individual Member 
States been taken into account? 

Not applicable. 

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