One of the most discussed aspects of DAC8 is its treatment of withdrawals to self-custody wallets. If you transfer crypto from an exchange to your Ledger, Trezor, or any wallet you control, that transfer is now reported to tax authorities.
Transfers to external wallet addresses, including hardware wallets (Ledger, Trezor) and software wallets (MetaMask, Trust Wallet).
What Exactly Gets Reported?
Under DAC8, crypto service providers must report transfers to addresses they don't control. This includes:
- Withdrawals to hardware wallets (Ledger, Trezor, etc.)
- Transfers to software wallets (MetaMask, Trust Wallet, etc.)
- Withdrawals to any external blockchain address
The report includes the amount transferred and the destination address. The exchange doesn't know who owns the receiving wallet, but the transfer itself is recorded.
Why Does This Matter?
Previously, moving crypto to a self-custody wallet was essentially invisible to tax authorities. Now, while they can't see what you do with the crypto after it leaves the exchange, they know:
- How much you withdrew
- When you withdrew it
- The blockchain address it went to
This creates a more complete picture of your crypto activity, even if some transactions remain outside the reporting framework.
Is This a Problem for Privacy?
This is a topic of ongoing debate. Supporters argue it's a necessary step to prevent tax evasion. Critics worry about the amount of financial data being shared between countries and the potential for misuse.
From a practical standpoint, if you've been accurately reporting your crypto taxes, this shouldn't change anything. The data simply provides tax authorities with a way to verify what individuals report.
What About DeFi Transactions?
Transactions that happen entirely on-chain (like swapping tokens on Uniswap after withdrawing to your own wallet) are not directly captured by DAC8. The reporting obligation falls on service providers, and decentralized protocols don't have a legal entity to impose requirements on.
However, the initial withdrawal from a regulated exchange to your DeFi wallet is reported.
Key Takeaways
- Withdrawals to external wallets are now reported, not just sales
- This applies in all EU countries and other CARF-participating jurisdictions
- What you do after withdrawing to self-custody is not directly reported
- Accurate tax reporting remains your responsibility
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