DAC8 and Extraterritoriality: How to Enforce Compliance for non-EU Operators

Abstract

Directive on Administrative Cooperation (DAC8) extends its scope to non-EU operators to improve the effectiveness of the exchange of information on crypto-asset transactions. Nonetheless, it is still for the Member States to determine the nature and size of the penalties for non-compliance and address their extraterritorial enforcement. Starting from this assumption, the present article aims to explore what penalties the Member States can adopt against non-compliant operators based in third countries. Furthermore, this study focuses on the multilateral, bilateral, and unilateral instruments for the extraterritorial enforcement of such penalties. To this scope, the author conducts doctrinal research followed by a conceptual analysis of the existing literature as well as interdisciplinary research focusing on the effectiveness of DAC8 for decentralized crypto-assets. The conclusions underline that the Member States should introduce a combined set of monetary and non-monetary penalties, including internet content blocking and a ban on cryptoasset transactions with blacklisted non-EU operators assisted by a sanctions program. Besides, to ensure their extraterritorial enforcement, Member States should adopt a broader definition of tax claim within the Convention on Mutual Administrative Assistance in Tax Matters (CMAAT) and the OECD Model Tax Convention as well as appropriate dissuasive measures against noncooperative jurisdictions in the area of recovery assistance. Administrative cooperation, Tax transparency, Exchange of information, DAC8, Crypto-assets, Monetary penalties, Nonmonetary penalties, Internet content blocking, Extraterritorial enforcement, Non-EU operators