UK Implements CARF Independently Post-Brexit

The United Kingdom has joined CARF's first wave of implementation, but as an independent jurisdiction rather than through the EU's DAC8 directive. This creates some differences for UK-based crypto businesses compared to their EU counterparts.

UK vs EU Implementation

Key differences between UK CARF and EU DAC8:

• Legal basis: UK implements directly from OECD model; EU uses DAC8 directive
• Scope: UK follows base CARF; DAC8 has some extensions
• Penalties: Different penalty frameworks
• Reporting format: Both use XML but may have minor variations

UK Crypto Market Context

The UK has a significant crypto market:

• Major global exchanges have UK entities
• FCA registration required for crypto businesses
• Established regulatory framework under development
• London remains a fintech and crypto hub

What UK Platforms Must Do

FCA-registered crypto businesses must:

• Collect tax residency self-certifications from users
• Obtain and validate Tax Identification Numbers
• Report transactions to HMRC
• Enable automatic exchange with partner jurisdictions

Cross-Border Considerations

For platforms operating in both UK and EU:

• Separate reporting to HMRC (UK) and relevant EU authority
• UK-EU information exchange will occur under CARF bilateral agreements
• Some differences in reportable transactions may exist
• Compliance systems should handle both regimes

Impact on UK Users

For UK tax residents:

• Crypto gains remain subject to Capital Gains Tax
• HMRC will receive data from UK and foreign exchanges
• Accurate self-assessment reporting becomes more important

Crown Dependencies and Overseas Territories

Several UK-connected jurisdictions are also implementing CARF:

• Jersey, Guernsey, Isle of Man (Wave 1)
• Cayman Islands, British Virgin Islands (Wave 2)
• Gibraltar (Wave 1)

Each has its own implementation timeline and regulatory approach.