EU defy tax loophole won’t last forever, says former OECD official

The EU's new cryptocurrency tax reporting framework is built on the basis that governments can enforce it immediately, while decentralized finance (DeFi) is temporarily out of reach.

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

“It doesn't make sense to go to your grandma and ask her to give you a tax report on all cryptos just because you've worked with her for a while,” said ColinTelegraph, Global Head of Government Solutions at Taxbit and a former OECD consultant. “You really have to go to intermediaries who do this as a business.”

Under the eighth amendment to the Directive on Administrative Cooperation, the rules applicable in the European Union (DAC8) require crypto exchanges and custodians to start collecting user activity data by 2026. While centralized platforms prepare for new reporting obligations, DeFi is still largely untouched, creating an uneven compliance landscape in the crypto industry.

How the global crypto tax report is being rebuilt.

Crypto tax reporting rules are often discussed under related acronyms, but are not interchangeable.

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

CARF is the OECD Crypto Tax Reporting Standard. It describes who reports it, what information is collected and how that information is shared between tax authorities. Those committed to data exchanges have begun rolling out domestic frameworks such as the EU's DAC8.

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

The EU's move coincides with the international adoption of CARF as dozens of states prepare to introduce tax information exchange regimes. Mangles recalled the more analog world of 30 years ago. If a customer wants to open a bank account in another region, they have to carry a suitcase of money, visit the bank in person and talk to them.

“It has to take a lot of steps, so only the really motivated or the resourceful do that. That's what we've seen in traditional tax evasion cases,” Mangles said.

With crypto, investors can theoretically sit in their living room, find an exchange on the other side of the world and start trading.

“I will never tell my tax authorities where I am – for example in France – about the money I made on the crypto exchange in Singapore, they will not know. They will have no idea,” Mangels added.

Under DAC8, crypto exchanges and custodian platforms are required to collect regular user data linked to tax domiciles and report aggregate transaction data to national tax authorities. That information is exchanged across borders.

Related: UK avoids ‘American pain' as regulator finalizes crypto rules

DeFi has no boundaries, but AML trends could change that.

DAC8 and CARF are tax reporting frameworks, but they also deal with anti-money laundering (AML) challenges for cross-border visibility in crypto markets.

The OECD sets international standards on taxation and economic policy, while the Financial Action Task Force (FATF) is a separate body that sets the bar for AML and counter-terrorism financing, both of which now extend to crypto markets. Tax authorities frequently refer to AML frameworks for definitions that inform how reporting regimes are designed.

“An interesting fact is that the FATF sits in the same office as the OECD, so you can go down the hall or have a coffee with the people there,” Mangels said, highlighting the close working relationship between the two bodies.

That connection helps explain why DeFi remains outside the scope of current tax reporting laws. As it stands, reporting obligations are delegated to identified intermediaries who facilitate transactions as businesses. In most DeFi, there is no centralized operator and custodian connection.

RELATED: Could Europe sell US debt if Greenland deal fails?

The June 2025 FATF report found that regulators are still struggling with what exactly regulates or influences decentralized financial platforms.

FATF has confirmed that 47 out of 99 advanced crypto platforms regulations require certain DeFi platforms to register as virtual asset service providers (VASPs). But even within those regions, only 12 have identified at least one unregistered DeFi platform that meets VASP requirements.

The tax authorities control the jurisdictional buyers

When DAC8 comes into effect in 2026, lawmakers are setting the standard for what crypto businesses can collect on balance. That means the first compliance shock lands on central exchanges and custodians.

Tax authorities are closely watching the development of AML, VASPs and efforts to unbundle liability models that could eventually lead to broader reporting obligations for crypto.

Mangles said the OECD is focused on preventing regulatory arbitrage. Policymakers will be keeping an eye on attempts to move crypto services to regions that have not yet committed to CARF.

“A big part of my work in the OECD was to monitor where the crypto service providers were moving to another place. As new crypto centers are built or online, they are also required to comply with OECD requirements,” Mangels said.

While the OECD cannot directly enforce compliance, judgments that fall outside its standards face reputational and financial pressures, often reinforced by FATF investigations.

As more economies harmonize their tax and AML regulations on common definitions and reporting standards, the scope for state procurement is expected to narrow. DeFi remains outside the reporting perimeter for now, but both the OECD and FATF are stating that geographic and structural gaps are temporary features rather than permanent exemptions.

Magazine: A ‘tsunami' of wealth is heading to crypto: Nansen's Alex Svanević