Currency Conversion Issues in DAC8 Reporting

Category: Troubleshooting Last Updated: 2026-02-12

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Overview

DAC8 reports require transaction values to be expressed in a specific currency, typically the currency designated by the receiving tax authority (often the euro for EU Member States, or a national currency for non-eurozone countries). Since crypto-asset transactions may be denominated in various fiat currencies, stablecoins, or other crypto-assets, currency conversion is a necessary step in the reporting process. This article addresses common issues with currency conversion and provides practical guidance for resolving them.

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Problem: Uncertainty About Which Exchange Rate to Use

Cause

Crypto-asset transactions may be recorded in USD, the crypto-asset's own unit, or another fiat currency. Converting these values to the reporting currency requires selecting an appropriate exchange rate, but the DAC8 directive does not always prescribe a single rate source with granular specificity.

Fix

1. Check the applicable national guidance. Some EU Member States may specify which exchange rate source to use (for example, the European Central Bank reference rate, or a national central bank rate). Always consult the specific guidance from the tax authority to which you are reporting.
2. Use a reputable and consistent source. In the absence of specific guidance, use a widely recognized and publicly available exchange rate source, such as the European Central Bank (ECB) daily reference rates for EUR conversions.
3. Document your chosen source. Whichever rate source you select, document the choice and apply it consistently across all conversions in the report. Switching rate sources mid-report can create inconsistencies that are difficult to explain.

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Problem: Timing of the Conversion

Cause

Exchange rates fluctuate throughout the day and between days. The rate at the exact moment of a transaction may differ significantly from a daily average or end-of-day rate, especially for volatile crypto-assets.

Fix

1. Determine the appropriate conversion date. The general approach under DAC8 is to convert at the time of the transaction or at the end of the relevant reporting period, depending on what is being reported (individual transactions versus annual aggregates). Verify this with the applicable national rules.
2. For individual transactions: If you are reporting the value of each transaction, use the exchange rate on the date the transaction occurred. A daily average or closing rate for that date is typically acceptable.
3. For aggregated annual amounts: If reporting aggregated values, clarify whether the tax authority expects conversion of each transaction individually and then aggregation, or aggregation in the original currency followed by a single conversion. The former approach (convert then aggregate) is generally more accurate.
4. Be consistent. Apply the same timing methodology across all transactions in the report.

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Problem: Handling Volatile Periods

Cause

Crypto-asset markets can experience extreme volatility, with prices changing dramatically within hours or even minutes. During such periods, the exchange rate at the start of a day may be vastly different from the rate at the end of the day.

Fix

1. Stick to your chosen methodology. If your approach uses a daily average or closing rate, apply it consistently even during volatile periods. Deviating from your methodology for selected transactions creates inconsistency.
2. Consider using rates from the transaction timestamp if available. If your platform records the exact fiat equivalent at the time of each transaction, this is often the most defensible value to use in the report.
3. Document the impact. If a volatile period has caused significant discrepancies between different rate sources, consider noting this in your internal records. Tax authorities generally understand that crypto-asset valuations can be volatile, but clear documentation strengthens your position.

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Problem: Converting Between Two Non-Reporting Currencies

Cause

Some transactions may be denominated in a currency that is neither the reporting currency nor a major fiat currency. For example, a trade denominated in a lesser-traded fiat currency, or a crypto-to-crypto trade where neither asset has a direct exchange rate to the reporting currency.

Fix

1. Use a two-step conversion. Convert the original currency to an intermediate widely-traded currency (such as USD or EUR) and then to the reporting currency if needed. This is a standard practice when direct exchange rates are not available.
2. For crypto-to-crypto trades: Determine the fiat equivalent using a reputable crypto-asset price feed (such as a major exchange's reported price or an aggregated price index) at the time of the transaction, then convert that fiat value to the reporting currency.
3. Document the conversion chain. Record each step of the conversion, including the rates used and their sources, so the full conversion can be verified.

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Problem: Rate Source Becomes Unavailable

Cause

If your chosen exchange rate source experiences an outage, discontinues publication, or changes its methodology, you may find yourself without rates for certain dates.

Fix

1. Maintain a backup rate source. Identify a secondary rate source in advance and document the conditions under which you would switch to it.
2. Cache rates proactively. Download and store exchange rates daily (or at the required frequency) so that you have the data available even if the source is temporarily unavailable.
3. If switching sources, document the change. Record the date of the switch, the reason, and any impact on reported values.

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Documenting Your Rate Sources

For audit readiness, maintain a record that includes:

• The name and URL of the exchange rate source.
• The specific rate type used (e.g., daily closing rate, daily average, spot rate at transaction time).
• The conversion methodology (per-transaction conversion versus end-of-period conversion).
• Any exceptions or deviations from the standard methodology, with explanations.

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Disclaimer

This article provides general guidance on currency conversion in the context of DAC8 reporting. The specific requirements for exchange rate sources, conversion timing, and methodology may vary by EU Member State. Always consult the relevant national tax authority's guidance and, where appropriate, seek professional advice.