What is the Crypto-Asset Reporting Framework (CARF)?

The Crypto-Asset Reporting Framework (CARF) was developed by the Organisation for Economic Co-operation and Development (OECD) to promote global tax transparency with respect to transactions involving Crypto-Assets.

The approach for CARF requires certain Crypto-Asset Service Providers, such as PayPal, to identify and report on certain crypto account holders who are tax residents of a Reportable Jurisdiction.

PayPal will collect, review, and classify customer information to determine which crypto accounts are held directly or indirectly by CARF Reportable Users* that could be subject to reporting. If PayPal determines that an account is reportable under CARF (based on its analysis of account holder and/or business entity information), PayPal is required to report information to the Luxembourg Inland Revenue (Administration des Contributions Directes, ACD), which may then share that information with other relevant tax authorities.

The reportable information generally consists of customer information (e.g., name, address, and Tax Identification Number (TIN) or similar) and aggregated transactional information for various types of crypto acquisitions, dispositions, and transfers. CARF requires reporting on an annual basis in most jurisdictions. 

* Reportable User means an individual or entity that is resident in a CARF Reportable Jurisdiction other than:

i. an entity the stock of which is regularly traded on one or more established securities markets;
ii. an entity that is a Related Entity of an entity described in clause i.;
iii. a Governmental Entity;
iv. an International Organization;
v. a Central Bank; or
vi. a Financial Institution (other than certain managed Investment Entities).