Crypto: Europe’s Defi Tax Gap Won’t Last Forever, Says Ex-oecd Official

DeFi is still out of scope for DAC8 and CARF, but AML enforcement trends suggest that may not last, according to Taxbit’s Colby Mangels.

The European Union’s new cryptocurrency tax reporting framework is built around what governments can immediately enforce, leaving decentralized finance (DeFi) outside its scope for now.

A former Organization for Economic Co-operation and Development (OECD) official who worked on the Crypto Asset Reporting Framework (CARF) said that this gap is a deliberate focus and not a blind spot.

“It doesn’t make sense to go to your grandma and ask her to give you all the tax reporting on crypto just because you happened to work with her over a certain period,” Colby Mangels, Taxbit’s global head of government solutions and a former OECD adviser, told Cointelegraph. “You really have to go to the intermediaries that are doing this as a business.”

Implemented in the EU under the eighth revision of the Directive on Administrative Cooperation (DAC8), the rules require crypto exchanges and custodians to begin collecting user activity data in 2026. While centralized platforms prepare for new reporting obligations, DeFi is still largely untouched, creating an uneven compliance landscape in the crypto industry.

Crypto tax reporting rules are frequently discussed through a tangle of related acronyms, but they are not interchangeable.

The Common Reporting Standard (CRS) is the OECD’s framework for the automatic exchange of information between tax authorities, implemented in the EU through DAC2. The CRS does not cover most crypto activity, a gap that is being filled by the CARF.

The CARF is the OECD’s crypto tax reporting standard. It sets out who reports, what information is collected and how that data is exchanged between tax authorities. Those committed to data exchanges have started rolling out domestic frameworks such as the EU’s DAC8.

DAC8 is the EU’s first harmonized tax transparency framework that extends cross-border reporting obligations to crypto services. It’s based on the CARF, and member states had a Dec. 31 deadline to adopt the directive into national law. DAC8 essentially aligns EU countries with the CARF, but members can still commit to different timelines at the OECD level.

The EU’s move aligns with the global adoption of the CARF, as dozens of jurisdictions prepare to introduce tax information exchange regimes. Mangels recalled a more analog world around 30 years ago. If a client wanted to open a bank account in anot

Source: CoinTelegraph