diff --git a/src/wasm/wasm-binary.cpp b/src/wasm/wasm-binary.cpp
index 746ddbc339f..fa857fd8307 100644
--- a/src/wasm/wasm-binary.cpp
+++ b/src/wasm/wasm-binary.cpp
@@ -5333,8 +5333,15 @@ void WasmBinaryReader::readElementSegments() {
 
     if (isDeclarative) {
       // Declared segments are needed in wasm text and binary, but not in
-      // Binaryen IR; skip over the segment
-      [[maybe_unused]] auto type = getU32LEB();
+      // Binaryen IR; skip over the segment.
+      if (usesExpressions) {
+        [[maybe_unused]] auto type = getType();
+      } else {
+        auto elemKind = getU32LEB();
+        if (elemKind != 0x0) {
+          throwError("unexpected passive segment elemkind, expected 0, got " + std::to_string(elemKind));
+        }
+      }
       auto num = getU32LEB();
       for (Index i = 0; i < num; i++) {
         if (usesExpressions) {
@@ -5369,7 +5376,7 @@ void WasmBinaryReader::readElementSegments() {
       } else {
         auto elemKind = getU32LEB();
         if (elemKind != 0x0) {
-          throwError("Invalid kind (!= funcref(0)) since !usesExpressions.");
+          throwError("unexpected passive segment elemkind, expected 0, got " + std::to_string(elemKind));
         }
       }
     }
diff --git a/test/spec/gc-elem-declare.wast b/test/spec/gc-elem-declare.wast
new file mode 100644
index 00000000000..347841aa0e9
--- /dev/null
+++ b/test/spec/gc-elem-declare.wast
@@ -0,0 +1,28 @@
+;; Binary spec test for declarative element segments with GC reftypes.
+;; Before the fix, parsing this module failed with "invalid tag index".
+;; See https://github.com/WebAssembly/binaryen/issues/8540
+
+(module binary
+  "\00asm" "\01\00\00\00"    ;; magic + version
+
+  "\01\1b"                   ;; Type section, 27 bytes
+  "\01"                      ;;   1 rec group
+  "\4e\06"                   ;;   rec group of size 6
+  "\5e\77\00"                ;;   type 0: (array i16)
+  "\50\00\5f\00"             ;;   type 1: (sub (struct))
+  "\5e\72\01"                ;;   type 2: (array (mut nullexternref))
+  "\50\00\60\01\7e\00"       ;;   type 3: (sub (func (param i64)))
+  "\5e\7d\01"                ;;   type 4: (array (mut f32))
+  "\50\00\5e\7b\01"          ;;   type 5: (sub (array (mut v128)))
+
+  "\03\03\02\03\03"          ;; Function section: 2 funcs, both type 3
+
+  "\09\0f\03"                ;; Element section, 15 bytes
+  "\07\63\02\00"             ;;   segment 0: declare (ref null 2), 0 exprs
+  "\07\63\03\01\d0\03\0b"    ;;   segment 1: declare (ref null 3) (ref.null 3)
+  "\07\71\00"                ;;   segment 2: declare nullref, 0 exprs
+
+  "\0a\07\02"                ;; Code section, 7 bytes
+  "\02\00\0b"                ;;   function 0: empty body
+  "\02\00\0b"                ;;   function 1: empty body
+)