COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Initiative to strengthen existing rules and expand the exchange of information framework in the field of taxation so as to include crypto-assets 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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   EUROPEAN COMMISSION  Brussels, 8.12.2022  SWD(2022) 402 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Initiative to strengthen existing rules and expand the exchange of information framework in the field of taxation so as to include crypto-assets 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) 400 final} - {SWD(2022) 401 final}  
 
 
Executive Summary Sheet 
Impact  assessment  on  an  initiative  to  strengthen  existing  rules  and  expand  the  exchange  of  information 
framework in the field of taxation so as to include crypto-assets. 

A. Need for action 

Why? What is the problem being addressed?  
The  main  problem  addressed  by  the  initiative  is  that  tax  authorities  lack  information  to  monitor  the  proceeds 
obtained using crypto-assets. The under-reporting of data related to revenues and income gained by crypto-asset 
users severely limits the ability of tax administrations to ensure that due taxes are effectively paid. Crypto-assets 
are  currently  not  within  the  scope  of  the  Directive  on  Administrative  Cooperation  (Council  Directive 
2011/16/EU  (DAC)),  which  provides  for  automatic  exchange  of  information  between  Member  States  for  tax 
purposes. 
Internet-based  products,  services  and  applications,  in  particular  those  that  take  advantage  of  distributed 
networks, such as crypto-assets, are easily traded cross-border. This creates tax challenges in terms of access to 
information, which can only be solved through strong administrative cooperation between countries. 
What is this initiative expected to achieve?  
As  a  general  objective,  the  proposal  aims  at  ensuring  a  fair  and  efficient  functioning  of  the  single  market  by 
increasing  overall  tax  transparency.  This  would  benefit  not  only  tax  authorities  but  also  users  and  service 
providers. This initiative also aims at safeguarding Member State tax revenues by extending and clarifying the 
reporting obligations concerning crypto-assets within the European Union. The current proposal (DAC8) should 
more  specifically  improve  the  ability  of  Member  States  to  detect  and  counter  tax  fraud,  tax  evasion  and  tax 
avoidance. It should also deter non-compliance. 
What is the value added of action at the EU level?  
Member  State  actions  do  not  provide  an  efficient  and  effective  solution  to  problems  that  are  transnational  in 
essence.  An  EU  approach  appears  preferable  to  avoid  a  patchwork  of  reporting  requirements  unilaterally 
implemented  by  some  or  all  Member  States.  Action  at  EU  level  ensures  coherence,  reduces  administrative 
burden for reporting entities and tax authorities, and is more robust in relation to potential loopholes due to the 
volatile nature of the assets concerned. 

B. Solutions 

What legislative and non-legislative policy options have been considered? Is there a preferred choice or 
not? Why?  

The following options have been considered: a) non-legislative, soft-law option; and b) six potential legislative 
initiatives.  The  legislative  initiatives  would  encompass  as  alternatives:  1)  transaction  by  transaction;  2) 
transaction by transaction with an SME threshold; 3) fully aggregated reporting; 4) fully aggregated reporting 
with an SME threshold; 5) hybrid or middle ground option; and 6) hybrid or middle ground option with an SME 
threshold. 
The preferred choice is a legislative initiative with intermediate coverage. Hence, the hybrid or middle ground 
option (option 5) is the most appropriate option to meet the objectives of the initiative. All crypto-asset service 
providers,  irrespective  of  their  size  and  country  of  establishment,  would  need  to  report  when  performing 
transactions  for  clients  resident  in  the  EU.  This  will  create  a  new  reporting  framework  and  exchange  of 
information between tax administrations. The initiative will encompass marketable crypto-assets where the aim 
is to exchange transactional information, albeit with some degree of aggregation.  

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Who supports which option?  

The outcomes of the public consultation and the specific consultation of crypto-asset service providers show a 
trend that favour a legislative initiative. Most Member States have also expressed support for the preferred 
choice. 

What are the benefits of the preferred option (if any, otherwise main ones)?  

C. Impacts of the preferred option 

The  initiative  is  expected  to  have  significant  direct  economic  benefits.  It  will  have  a  positive  impact  on  tax 
collection, with additional tax revenues  estimated at EUR 1.7 billion stemming from crypto-asset transactions. 
Those revenues can be a source to fund Member State economic and social policies. The initiative is expected to 
contribute to fairness aspects and increased trust in tax systems through fair burden-sharing across taxpayers.  

What are the costs of the preferred option (if any, otherwise main ones)?  
The  IT  solution  that  would  best  facilitate  reporting  and  exchange  of  information  with  the  lowest  costs  and 
highest benefits for all parties involved – crypto-asset service providers, Member States and the Commission – is 
the central directory (already used for exchanges under DAC3 and DAC6). By analogy with previous reporting 
requirements,  costs  for  tax  administrations  when  dealing  with  crypto-assets  are  estimated  to  vary  between 
EUR 1 million  and  EUR 12.96 million  in  one-off  (development)  costs  and  between  EUR 1 million  and 
incur  around 
in  recurrent  costs.  Crypto-asset  service  providers  are  estimated 
EUR 5.67 million 
EUR 259 million  in  one-off  costs  and  between  EUR 22.6 million  and  EUR 24 million  in  recurrent  costs.  The 
European  Commission  will  also  incur  costs  and  these  are  expected  to  be  around  EUR 0.48 million  in  one-off 
costs and EUR 0.21 million in recurrent costs. These estimates are however based on a number of assumptions 
and extrapolations and should be used with caution. 
How will businesses, SMEs and micro-enterprises be affected?  

to 

The initiative is expected to have a limited impact on small and medium-sized businesses. The information to be 
reported is largely available to crypto-asset service providers for their daily operations. Furthermore, the crypto-
asset market matures fast and so do service providers. While the initiative will bring compliance costs, it may be 
more  favourable  to  SMEs  to  have  a  single  set  of  rules  across  the  EU,  rather  than  a  potential  patchwork  of 
reporting requirements across the EU. The initiative should also ensure a level playing field across all categories 
of players, which should benefit SMEs. 

Will there be significant impacts on national budgets and administrations?  
The  costs  that  national  administrations  would  incur  depend  on  the  IT  solution  used  for  the  exchange  of 
information. The benefits for national budgets in terms of additional tax revenues significantly  outweigh costs 
under  each  and  every  option,  and  are  estimated in  billions  of  euro  (about  EUR 1.7 billion  under the  preferred 
option). 
Will there be other significant impacts?  
The initiative will comply with the General Data Protection Regulation and therefore will not negatively impact 
the fundamental right to protection of personal data.  

D. Follow-up 

When will the policy be reviewed?  
The initiative will be monitored through information collected via annual assessments and discussions with tax 
administrations.  A  more  comprehensive  assessment  will  take  place  in  compliance  with  the  DAC’s  general 
provisions on evaluation, when the Commission is due to present a report to the European Parliament and the 
Council on the functioning of the Directive administrative cooperation in direct taxation.  

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