CARF reporting: What data about crypto will the tax office receive?

CARF reporting: What data about crypto will the tax office receive?

CARF reporting: What data about crypto will the tax office receive?

CARF introduces a fundamentally new level of tax transparency for crypto assets.
Tax authorities receive not only information about owners, but also detailed data on cryptocurrency movements, exchanges, and the economic results of transactions.

Jurisprudential Consulting Group analyzes what data is transmitted through CARF reporting, how it is compared with CRS and what this means for crypto platforms and investors.

1. detailing of transactions with crypto assets
2. automatic international exchange
3. focus on source of funds and source of wealth
   

Consultation cost from 250 euros

What is CARF reporting?

CARF reporting This is a crypto-asset tax reporting mechanism developed by the OECD and being implemented in the EU through DAC-8.
It obliges crypto platforms to collect and transmit a standardized set of data about clients and their transactions with crypto assets.

CARF is not focused on the ownership of an asset per se, but on user economic behavior.

What user data is transferred to the tax authorities?

Under CARF, crypto platforms transmit:

1. user's full name
2. date and place of birth
3. residential address
4. country of tax residence
5. tax ID
6. status of beneficial owner or controlling person
7. linked account details

This information forms a user's tax profile, comparable to the bank's CRS profile.

What crypto-asset data is subject to reporting?

CARF covers a wide range of assets:

1. kriptovalyuty
2. utility and governance tokens
3. stablecoins
4. tokenized assets
5. NFTs, if they are used for investment or payment purposes

The focus is on assets that have economic value and marketability.

What transactions are disclosed by CARF reporting?

The following are included in the reporting:

1. buying crypto assets for fiat
2. selling crypto assets for fiat
3. crypto-crypto exchange
4. transfers between users using the platform
5. deposit and withdrawal of funds
6. liquidation of positions
7. accrual of income and remuneration

Not only the amounts are transferred, but also nature of the transaction, date and economic result.

Financial indicators that the tax authorities receive

CARF reports:

1. the value of crypto assets at the time of the transaction
2. gross income from transactions
3. capital gain or loss
4. aggregated turnover for the reporting period
5. linking operations to a specific user

This allows tax authorities to calculate tax liabilities without the participation of the investor.

We offer a solution at the level of international standards

How data is transferred between countries

The process looks like this:

1. The crypto platform collects data
2. the report is submitted to the tax authority of the platform's country of registration
3. data is automatically exchanged with the tax authorities of the user's country of residence

Thus, CARF becomes international by default, similar to CRS.

How does CARF reporting differ from AML reporting?

AML and KYC focused on risk and suspicious transactions.
CARF reporting is focused on regular tax transparency.

These are different modes with different goals, but they use similar data.

Implications for crypto platforms

For CARF reporting platforms, this means:

1. the need to store large amounts of data
2. standardization of reporting formats
3. integration of tax logic into IT systems
4. increasing responsibility for the accuracy of information
5. risk of fines for incomplete reporting

Compliance is becoming an integral part of operational activities.

Consequences for investors

For crypto platform users:

1. transactions become fully traceable
2. the data is automatically sent to the tax authorities
3. discrepancies with declarations are easily identified
4. the importance of correct income accounting is increasing

CARF does not impose new taxes, but makes it impossible to ignore tax obligations.

Сonclusion

CARF reporting defines what cryptocurrency data the IRS receives and how it is used.
This is a transition from fragmented control to systemic tax transparency of crypto assets.

For businesses and investors, the key issue is not data hiding, but competent adaptation to the new reporting reality.

Jurisprudential Consulting Group provides support to crypto platforms and private clients on CARF reporting, DAC-8, CRS and MiCA, helping to build a correct and sustainable compliance model.