In a major step towards greater financial transparency, the Latvian Cabinet has approved Bill No. 24-TA-3148, a legislative package designed to implement the Crypto-Asset Reporting Framework (CARF) and the Directive on Administrative Cooperation (DAC8) within the European Union. The new rules, set to take effect on January 1, 2026, will significantly expand reporting obligations for crypto-asset service providers and align Latvia’s regulatory regime with evolving international standards.
The law introduces binding measures for the automatic exchange of financial account information (AEOI) across EU member states and other participating jurisdictions, marking Latvia’s latest move to combat tax evasion and improve cross-border transparency in the digital asset space.
EU-Wide Cooperation Drives Reform
The centrepiece of the legislation is Latvia’s transposition of Directive (EU) 2023/2226, also known as DAC8. This directive was developed in conjunction with the Multilateral Competent Authority Agreement (MCAA), a global accord that facilitates the exchange of financial account data among tax authorities under the CARF system.
By embedding these international agreements into domestic law, Latvia joins a growing number of EU countries that are preparing for the widespread sharing of crypto-related financial data across borders.
The bill mandates that crypto-asset service providers—such as exchanges, brokers, and wallet providers—submit detailed transaction information to Latvian tax authorities, who will then exchange the data with their counterparts in other EU states and compliant jurisdictions. The goal is to ensure that tax authorities worldwide have consistent access to the information they need to track taxable income and prevent crypto-based tax avoidance.
Scope, Definitions, and Penalties
The law introduces a clear definition of reportable crypto-assets, encompassing a wide array of digital tokens, including those used in crypto swaps. It also sets out comprehensive compliance obligations for service providers who operate in, or serve customers in, Latvia.
Crucially, the bill includes penalties of up to €14,000 (approximately US$16,026) for service providers that fail to meet their reporting obligations. These penalties reflect the government’s intent to enforce the new standards seriously and consistently.
The adoption of these measures follows a broader EU trend towards tightening financial controls over crypto-assets, especially as digital finance becomes increasingly mainstream. Authorities hope that by harmonising tax reporting rules, they can limit loopholes and ensure that all EU citizens are held to the same compliance standards—regardless of where their digital assets are held or traded.
Looking Ahead to 2026 Implementation
While the law will not come into effect until the start of 2026, the approval gives businesses and regulatory bodies over a year to prepare. This transition period is intended to allow crypto service providers time to update their systems, ensure data accuracy, and build reporting pipelines that comply with the new requirements.
By adopting CARF and DAC8 early, Latvia positions itself as a proactive player in the EU’s ongoing digital finance reform. The move is especially notable in a region where crypto regulation is rapidly evolving, and countries are competing to balance innovation with accountability.
Once implemented, the new framework will provide tax authorities with a much clearer view of crypto transactions and holdings, thereby helping to reduce the anonymity that has often surrounded digital assets.
A Global Trend Towards Digital Asset Regulation
Latvia’s decision to adopt CARF and DAC8 mirrors similar initiatives underway across Europe and beyond. Countries are increasingly recognising that while cryptocurrencies offer new economic opportunities, they also pose unique regulatory challenges—especially when it comes to taxation and cross-border enforcement.
By anchoring its new law in EU directives and international agreements, Latvia signals its commitment to global cooperation and compliance in the digital era. As other nations follow suit, the once-shadowy world of crypto finance is gradually being brought into the light—one regulation at a time.
