New rules for the exchange of information for tax purposes regarding cryptoassets



In recent years, individuals and companies have adopted the use of cryptoassets for a wide and growing variety of financial and investment activities, including their use as a means of payment for international transactions and transfers. However, unlike traditional financial products (e.g., bank deposits, securities, mutual fund shares or trusts, among others), cryptoassets can be transferred and held without the intervention of traditional financial intermediaries and without any central administrator having full visibility of the transactions made or of the respective holdings. That is why, a “pseudo anonymity” of cryptoassets is alluded to.

With support in blockchain technology (blockchain), cryptoassets can be issued, registered, transferred and stored in a decentralized manner and the new intermediaries involved include those facilitating exchanges (exchanges, brokers, dealers and other operators) and those who provide the services of wallets.

In this context, from the OECD[1] they understand that these new assets (crypto and electronic money or digital currencies, even those issued by central banks) could be used to undermine existing international tax transparency initiatives, such is the case of the automatic exchange of financial accounts established by the Common Reporting Standard, CRS. In addition, these new assets, among others, can be stored and have payment functions similar to traditional assets subject to the rules of the CRS, therefore, it becomes necessary to level the playing field.

For this reason, the OECD published, on March 22, 2022, a public consultation document that includes specific questions[2] on a new global tax transparency framework to facilitate national reporting and the automatic exchange of tax information between states regarding crypto assets (Crypto-Asset Reporting Framework, or CARF), as well as proposed amendments to the standard CRS relating to the automatic exchange of financial account information between countries, including the new CARF rules and revised CRS rules, and their respective comments.

The knowledge of this document is important for the states’ political leaders, due to the possible adoption of these rules and their technical design components, and for the cryptoasset industry on whose intermediaries and operators the new due diligence and information reporting obligations will fall.


Request from G20 and the work of OECD.

The G20 has asked the OECD to develop a framework for the automatic exchange of information on cryptoassets. This new CARF framework foresees the collection at the respective national levels from the reporting of the service providers reached, and the exchange of relevant information, for tax purposes between tax administrations, with respect to persons conducting certain transactions in cryptoassets, following a scheme similar to the CRS.

Alongside this new framework, the OECD has also developed proposals as part of the first comprehensive review of the CRS, with the aim of further improving its operation, based on the experience gained since its adoption.


New model rules of cryptoassets, the CARF rules.

The cryptoassets market does not use traditional financial intermediaries (banks, investment entities, trusts, etc.), which are the typical information providers of the information regimes implemented by the tax administrations with respect to their clients, for example the financial institutions reached by the reporting obligations, according to the CRS. The new types of intermediaries (exchanges suppliers and other brokers) are often not required to report information for tax purposes in relation to their clients. In addition, since individuals can have crypto assets in wallets that are not affiliated with any service provider and transfer the assets across national borders, there is a risk that these assets will be used for illicit activities or to evade tax obligations.

The CARF rules set out the scope of cryptoassets to be covered; the intermediaries subject to data collection and reporting requirements; the transactions subject to reporting and the information to be reported; and the relevant due diligence procedures for identifying users and the relevant tax jurisdictions for reporting. The regulatory, technical and operational architecture of the CRS was fundamental to the development of the CARF.

The definition of cryptoassets refers to the use of distributed ledger technology with cryptographic security and similar technology, so the definition may also cover future asset classes of a functionally similar nature. This definition covers assets that can be held and transferred in a decentralized manner, without the intervention of traditional financial intermediaries. This definition is intended to ensure that the assets covered by the new reporting framework for tax purposes are also within the scope of the recommendations of the financial action task force (FATF), so that due diligence requirements can be based on existing obligations in relation to anti-money laundering (AML/CFT).AML) and “know your customer” (KYC).

With respect to non-cashable tokens, NFTs, in one of the public consultation questions, it is mentioned that they are within the scope of the FATF Recommendations as a virtual asset if they are to be used for payment or investment purposes in practice. According to the CARF framework, an NFT would have to represent a security and be tradable or transferable to be considered a cryptoasset. In this regard, the following public question is posed to the industry Are you aware of any circumstances in which this is not the case, in particular, any NFT that being covered by the definition of cryptoassets would not be considered virtual assets or financial assets according to the FATF Recommendations or vice versa?

The information requirements under CARF cover exchanges between cryptoassets and fiat currencies; exchanges between one or more forms of cryptoassets; reportable retail payment transactions; and transfers of cryptoassets. Transactions must be reported in aggregate for each type of crypto asset and separately for inbound and outbound transactions.

The CARF establishes the due diligence procedures, which must be conducted by reporting service providers to correctly identify the users of cryptoassets, the relevant tax jurisdictions to report; and the information that must be reported under the CARF.

Service providers subject to CARF related to cryptoassets include those that are intermediate (known as exchanges), who transact for or on behalf of their customers, the brokers and dealers and other operators of these crypto assets.


Updating the CRS rules.

Together with CARF, the OECD has also developed proposals as part of the first comprehensive review of the CRS, with the aim of improving its operation, based on the experience acquired by the tax administrations and the entities achieved during the last seven years since its adoption. These proposals include:

  • Expand the scope of the CRS to cover electronic money products and digital currencies issued by central banks, CBDC.
  • To cover indirect investments in cryptoassets through investment entities and derivatives.
  • To provide an efficient interaction between the CRS and the CARF, in particular to limit cases of duplicate reports.
  • Improve due diligence procedures and the effectiveness of reporting, with a view to increasing the use of CRS for the tax administrations and limit the workload on the financial institutions involved.


Final words

This first document includes a proposal for new CARF and revised CRS technical rules and their respective comments, and in a second phase it would be necessary to address the framework for the agreement of competent authorities -bilateral or multilateral- to formalize the legal mechanism that allows the exchange of information.

Some voices warn that a large part of the crypto industry is not following the OECD developments closely. This public consultation is the opportunity for the industry to get involved and answer the questions that this document raises in a very concrete way. Intermediaries and other cryptoasset service providers will be the key pieces for the successful implementation of these CARF Model rules, hence the importance of them getting involved at this stage of defining rules.

Finally, it should be noted that, although this advance in transparency is especially important, countries must assume their responsibility to clarify or, if necessary, expressly establish the tax treatment that cryptoassets produce in direct and indirect taxation, so that tax administrations can control the correct tax compliance and also to provide certainty and legal security to taxpayers.

[1] The OECD has published a study that reviews the international tax treatment of cryptoassets that was analyzed in the following posts of this Blog: 1) “OECD recommendations on tax treatment and the necessary international transparency of cryptocurrencies” (2020-10-28) and 2)“Implications of crypto assets in the value-added tax, income tax and property taxes” (2020-12-10).
[2] For more information or to comment on the public consultation draft: Comments may be sent no later than April 29, 2022, by e-mail (in Word format) to

Disclaimer. Readers are informed that the views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group the author might be associated with, nor to the Executive Secretariat of CIAT. The author is also responsible for the precision and accuracy of data and sources.

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