Starting in 2026, all exchanges serving European users will be required to automatically report your cryptocurrency balances and transactions to the IRS. Without exception, regardless of whether the platform is based in Spain or abroad.
This change comes with the DAC8 regulation and marks a turning point in crypto taxation in Europe. If you use platforms like Binance or Kraken, it’s no longer a question of whether the tax authorities can access your data, but rather that you will receive them directly on a regular basis.
What is DAC8 and why is it changing the regulatory landscape for cryptocurrencies?
DAC8 (Directive on Administrative Cooperation 8) is the European regulation that incorporates cryptoassets into the system for the automatic exchange of tax information among European Union member states.
Until now, this system was already in place for bank accounts under the CRS standard. With DAC8, cryptocurrencies are now subject to the same level of oversight.
This means that exchanges will be required to identify their users and report their activity to the tax authorities in the country where they reside.
The goal is clear: to eliminate tax opacity surrounding the use of cryptocurrencies.
When does DAC8 take effect (key dates)
Here is one of the most important points that many articles fail to clarify:
- 2023 → Adoption of the regulations
- 2025 → Exchanges begin collecting data
- January 1, 2026 → Effective date
- 2027 → First automatic exchange of information between countries
This means that Transactions you make in 2025 can be reported at a later date, even though the regulations don't officially take effect until 2026.
Important note: DAC8 isn't the future—it's already being implemented. Whatever you do today can already be part of the system.
What information will exchanges send to the IRS?
One of the most significant changes is the level of detail that will be reported. It is not just a matter of identifying the user, but of reconstructing their entire activity.
Exchanges must report:
- User information (name, tax residence, tax ID number)
- Cryptocurrency balances
- Transactions (purchases, sales, and exchanges)
- Transfers between accounts and wallets
This dispels one of the industry’s biggest myths: that trading on foreign exchanges allows one to avoid tax scrutiny.
Real-life example: a user in Spain with cryptocurrency
To understand the impact, let's look at a specific example.
A user residing in Spain with €30,000 in cryptocurrency on a foreign exchange:
Before DAC8:
- The Treasury may not have had direct access to that information
- Monitoring relied on inspections or incomplete data
With DAC8:
- The exchange will automatically report the balance
- The information will be sent to the Internal Revenue Service
- It will be cross-checked against your tax return
If there are discrepancies, the risk of a review increases significantly.
Relationship to Form 721 (the point of greatest interest to the user)
DAC8 does not replace existing obligations; rather, it reinforces them.
In Spain, the Model 721 requires the reporting of cryptocurrencies held abroad when the 50.000€ as of December 31.
This means:
- If you have more than €50,000 in cryptocurrency on exchanges such as Binance or Kraken → you must file Form 721
- If you don't do this → you may face penalties
With DAC8, the tax authorities won't have to rely on you filing voluntarily—they'll have the data anyway.
Mistakes that will now be much more noticeable
One of the major changes in DAC8 is that it reduces the margin for error (or oversights).
From now on, common practices like these will be much easier to spot:
- Failure to report profits from a sale
- Ignore exchanges between cryptocurrencies
- Failure to report assets held on foreign exchanges
- To think that using platforms outside Spain avoids oversight
In the past, some of these errors might have gone unnoticed. With DAC8, that possibility is drastically reduced.
What you should do from now on (and why)
This is where the approach really changes. It's not about panicking, but about adapting to a new environment.
1. Keep a close eye on your operations
It’s not enough to just know how much you have. You need to track your purchase prices, sales, and trades. Crypto tracking tools or reports from the exchange itself can make this process easier.
2. Understanding when you owe taxes (and when you don't)
Many people believe that taxes are only due when Bitcoin is converted to euros. That is not the case. Exchanging Bitcoin for Ethereum already constitutes a taxable event.
3. Choose exchanges that simplify tax compliance
Platforms like Kraken or regulated European exchanges typically offer better traceability and clearer reporting.
👉 Here you can see which exchanges are most recommended in Spain https://exchangeselector.com/mejores-exchanges-para-espana/
4. Check whether you are required to file Form 721
If you approach or exceed the €50,000 on foreign exchanges, ...this point is critical. It is not optional, and with the DAC8 it will be even more apparent.
Does this mean the IRS will know everything?
Not entirely, but much more than before.
DAC8 focuses on centralized exchanges. This means there are still areas that are harder to track, such as:
- Self-custody wallets
- DeFi Protocols
- Transactions outside regulated platforms
However, most users rely on exchanges, so the actual scope of the regulations is very broad.
Conclusion: The End of the “Gray Area” in Cryptocurrency
DAC8 marks the final step toward integrating cryptocurrencies into the European tax system. What was previously a partially opaque environment is now becoming a transparent and automated system.
For the user, this doesn't change what they need to report, but it does change something much more important:
👉 the likelihood that the IRS will detect it.
If you trade in cryptocurrencies, the best course of action right now isn't to look for ways to avoid regulation, but to fully understand your obligations and adapt accordingly.
Because in this new landscape, failing to file is no longer a matter of risk… but of time.
Legal Notice: This article is for informational purposes only and does not constitute financial advice or investment recommendations. Investing in cryptocurrencies involves a high level of risk. Always consult with a qualified professional before making investment decisions.