Tax 

DAC 7: New obligation for digital platforms to bring better overview of online trading

The new notification obligation will apply to all operators of internet platforms that allow sellers to offer and sell goods and selected services (e.g. the provision of real estate, means of transport, or some form of personal service) via their web interface. Although the obligation primarily applies to platform operators, sellers themselves should also be vigilant. Firstly, because the platforms may require their cooperation and, in particular, because it is the information about their transactions and sales that the platforms will provide to the tax authorities.

A year ago, we informed you that the European Commission approved the amendment of the Directive on Administrative Cooperation to include the new obligation enshrined in DAC 7.

EU Member States are obliged to implement the Directive in their local legislation as of 1 January 2023. In the Czech Republic, the amendment to the Act on International Cooperation in Tax Administration has already passed its first reading in the Chamber of Deputies.

The notification obligation applies to selected activities, such as the provision of immovable property (whether in the form of accommodation or mere rental), the provision of a means of transport, such as a car, but also a bicycle or scooter, personal services or the sale of goods. The personal service category can cover a range of activities from manual labour to tutoring or the provision of online bookkeeping. However, the essential feature in all cases is that the services or goods are sold by sellers who are not affiliated with the platform. However, they can also be individuals who are not entrepreneurs or, conversely, large renowned companies.

The bill provides for several exceptions for sellers who will be excluded from this reporting obligation, i.e. platforms will not be obliged to provide data on the sales of these sellers. These include, for example, public entities or entities listed on the stock exchange. They may also be large-scale accommodation providers, i.e. those that will provide a given property more than 2,000 times in a given calendar year. However, such exclusion always applies to a specific property only. This exclusion also extends to sellers who sell goods for less than EUR 2,000 and at the same time carry out less than 30 transactions. It is, therefore, clear that the set of excluded entities will in practice be very narrow and platforms will often not be able to determine this information in advance but only after the end of the calendar year.

The scope of information required is another area in need of rigorous examination. The bill defines which data are to be recorded by the platform. However, a number of uncertainties may arise when correctly determining the sales of goods or services, as it may involve a number of factors such as various fees, cancellations, or refund processes.

The bill envisages that the first period for which reporting will be required is 2023, with the reporting deadline being 31 January 2024. Hence, platforms should be able to record data as of 1 January 2023. Given that the setup is likely to require intervention in the systems setting for most entities, there is no time to spare.

If you would like to find out whether the new reporting obligation will affect your business, do not hesitate to contact us.

DAC 7 dReport newsletter

Upcoming events

Seminars, webcasts, business breakfasts and other events organized by Deloitte.

    Show morearrow-right