Sovos and Label Partner on CARF Reporting

Why It Matters

CARF introduces the first global crypto‑transaction reporting regime, forcing digital‑asset firms to overhaul compliance processes; the Sovos‑Label solution offers a ready‑made, scalable way to meet these obligations and avoid costly in‑house development.

Key Takeaways

• CARF reporting mandatory from 2027 for 2026 tax year
• Sovos and Label combine CARF with 1099-DA capabilities
• Solution automates onboarding, transaction aggregation, XML generation
• Supports cross‑border digital asset platforms and traditional investments
• Enables zero‑rejection accuracy and state‑level filing readiness

Pulse Analysis

The OECD’s Common Reporting Standard for Crypto‑Asset Transactions (CARF) marks the first global mandate that will require digital‑asset platforms to report every transaction beginning with the 2026 tax year, with compliance due in 2027. Regulators across Europe, North America and Asia are tightening tax‑transparency rules to close the gap between traditional finance and the rapidly expanding crypto ecosystem. For exchanges, custodians and VASPs, the new obligations translate into massive data‑collection, validation and filing workloads that far exceed existing FATCA or CRS duties.

Sovos, a long‑standing tax‑compliance provider, and Label, a specialist in automated FATCA, CRS and CARF solutions, have joined forces to deliver a unified offering called Label CARF + Sovos 1099‑DA. The platform merges Label’s purpose‑built CARF engine—complete with self‑certification capture, real‑time transaction aggregation and OECD‑compliant XML output—with Sovos’ broader 1099‑DA, 1099‑B and state‑level filing capabilities. By automating client onboarding, cost‑basis tracking and foreign‑exchange valuation, the joint solution promises zero‑rejection accuracy and a single tax statement that spans both digital and traditional assets.

The partnership arrives as digital‑asset firms scramble to embed compliance into core product roadmaps, avoiding costly in‑house development and audit risk. By offering a plug‑and‑play module that aligns with existing FATCA/CRS workflows, Sovos and Label lower the barrier to entry for smaller exchanges while giving larger platforms a scalable, audit‑ready infrastructure. As more jurisdictions adopt CARF and state‑level reporting expands, the combined solution positions both vendors to capture a growing share of the RegTech market, reinforcing the trend toward consolidated, end‑to‑end tax reporting suites for the crypto economy.