Monthly Tax Reporting

1

End-of-Month Cut-Off and Snapshotting

• Time window – On the final block t of every calendar month (local to the user’s jurisdiction), the protocol emits a MONTHTAIL marker into the Tax Graph.

• Point-in-time state – All cATUs with timestamps ≤ t are frozen into an immutable snapshot. This guarantees that late chain reorganisations or historical re-classifications never bleed into a closed period.

• Version pinning – The snapshot stores hashes of the exact rulebook and classification plug-in versions used, ensuring reproducible re-calculation years later.

2

Report Compiler Pipeline

The compiler runs as a deterministic Rust job on decentralised worker nodes:

Stage	Purpose
Load phase	Streams the snapshot DAG into memory-mapped columnar vectors (Arrow) for fast aggregation.
Aggregation phase	Collapses tens of thousands of cATUs into reporting events (gains, losses, income, fees), respecting cost-basis stacks and holding-period logic.
FX reconciliation	Converts all values into the jurisdiction’s filing currency (EUR for DE/AT/FR, CHF for CH) using oracle-anchored month-end FX rates plus intramonth spot rates for each taxable event.
Validation phase	Runs a rule-based auditor: checks value conservation, detects negative cost bases, flags outliers vs. stochastic expectations, and stamps each finding with a machine-readable severity code.
Serialisation phase	Emits parallel artefacts (PDF, JSON, CSV, XBRL) and a compact binary delta for diff-based storage.

All processing is single-pass and stream-safe; memory usage scales linearly at 3 kB per 1 000 ATUs.

3

Output Artefacts

Artefact	Description	Size (avg.)
PDF	Human-readable, paginated summary; multi-language UI strings injected at render time	200–600 kB
JSON	Canonical machine ledger for downstream tooling; follows TaxChain Report Schema v2.3	40–120 kB
CSV	Flat table for Excel / BigQuery; optional for data-scientist workflows	15–40 kB
XBRL	Direct import for national e-filing portals (e.g., Elster in Germany)	60–90 kB
Δ-Binary	LZ4-compressed binary diff vs. prior month; stored on IPFS to reduce redundancy	3–8 kB

The PDF includes four fixed sections:

1. Executive Overview – taxable income, realised gains/losses, total fees, and withholding suggestions.

2. Position Ledger – FIFO/LIFO stacks with opening, movement, and closing balances per asset.

3. Event Log Appendix – row-level detail for every classified event, including hash links back to source transactions.

4. Validation & Signatures – cryptographic footers (see § 6).

4

Encryption, Storage & Access

• AES-256 GCM envelope encryption – Every artefact is encrypted client-side; keys split via Shamir Secret Sharing (user + optional guardian shard).

• IPFS cold storage – Encrypted bundles are pinned across 12 geo-distributed IPFS gateways and referenced in the user’s Tax Graph node.

• pNFT gating – A tax advisor possessing a valid Permission NFT can fetch the bundle; decryption rights are baked into the NFT metadata and expire automatically at the date encoded on-chain.

• Revocation – Users burn or freeze a pNFT to revoke access; on the next block, all gateway access tokens tied to that NFT are invalidated.

5

Digital Signatures & Authenticity

To eliminate disputes, every report carries two layers of signing:

1. User signature – The wallet that owns the Tax Graph signs a SHA-256 digest of the report bundle.

2. Protocol attestation – The TaxChain DAO multi-sig countersigns, certifying that rulebook checksum x produced hash y.

Both signatures are embedded in the PDF’s X.509 field and in detached JWS files for machine verification. Auditors can cross-verify the hash on-chain against the snapshot anchor referenced in the report.

6

Regulator-Ready Formatting

• Field mapping – Each jurisdiction supplies a mapping file that aligns TaxChain JSON keys with local e-filing field IDs (e.g., German Annex SO Line 42).

• Rounding logic – Amounts follow domestic rules (e.g., Germany rounds to full euros; Switzerland retains rappen).

• Decimal separators & locales – Automatically rendered (comma vs. point) per ISO LOC-ID in user profile.

• Attachment manifest – NFT metadata for each pNFT includes a “manifest hash” that authorities can query to retrieve a minimal audit trail without private portfolio details.

7

Delta-Aware Updates and Back-Posting

Should a late-arriving transaction appear (e.g., a cross-chain bridge finalises after the month closes), TaxChain:

1. Generates a delta patch covering only the affected cATUs.

2. Replays cost-basis stacks for the impacted assets.

3. Issues a Revision N report bundle, cryptographically linked to the original via a supersedes field.

4. Notifies the user and any active pNFT holders of the revision via on-chain ReportUpdate events and optional off-chain webhook relays.

Revisions are timestamped but never overwrite previous versions, preserving an immutable audit chain.

8

Developer & Enterprise Integrations

• GraphQL download endpoint – Wallet providers can embed a “Download tax report” button that fetches the current PDF via a signed request proxy.

• Webhook triggers – Institutions subscribe to a tax.ready event to automate accrual booking at month-end.

• Streaming API – Hedge funds pull interim CSV deltas nightly for provisional P&L accounting.

9

Performance & Cost

• Throughput – A single worker node compiles ~150 000 ATUs per second; horizontal scaling is linear.

• Gas footprint – Anchoring the monthly hash to Ethereum mainnet costs < $4 at 30 gwei, paid from the TaxChain fee pool.

• Storage – With binary diffs, 10 years of reports for an active DeFi power user consume < 25 MB.

10

Future Enhancements

• Zero-Knowledge Report Proofs – Succinct zk-SNARK gadgets will allow users to prove “total taxable income ≤ €X” without revealing per-trade data.

• Real-Time Streaming Reports – Sub-monthly (daily or even hourly) micro-reports for high-frequency desks and algorithmic traders.

• Multi-jurisdiction splits – For nomadic users, simultaneously generate partial reports per country based on dynamic residency windows.

• AI-Assisted Narratives – Deterministic, template-driven LLM module that auto-writes plain-English explanations of complex tax events for each month’s summary.