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On 22 March 2021, the EU adopted an EU Directive introducing automatic exchange of information for EU and non-EU digital platform operators (“DAC7”). Following this DAC7 Directive, EU and non-EU digital platform operators will have to report information about sellers of certain personal and rental services and of goods, who are using the digital platform for their activities. In addition to the information exchange requirements for digital platform operators, DAC7 also brings some amendments to existing provisions on administrative cooperation in the field of taxation.
DAC7 needs to be implemented in the Netherlands and the other EU Member States by 31 December 2022. Digital platform operators will be required to report on the year 2023 for the first time in 2024. To this end, digital platform operators should have seller due diligence procedures in place as of 1 January 2023.
If your enterprise is a digital platform operator, you will need to carry out specific due diligence procedures over the sellers in order to collect and verify the information necessary for the purposes of the exchange corresponding to reportable periods as of 1 January 2023.
We refer you to the dedicated page on “Taxation of the digital economy” under theme DAC7 in which you can see how PwC can assist you in the full end-to-end process, from identifying the exact impact of DAC7 on your business to assisting and implementing within your Compliance framework and digital infrastructure, as well as assist in your annual reporting towards your local tax authority.
If you are a Seller using a digital platform for the rental of immovable property, the intermediation to perform personal services, the sale of goods or the rental of vehicles and other transportation, you must be aware of the fact that from 2023 the EU Member States’ tax authorities will have information about your activities performed via these platforms.
In general, the tax authorities may use this information for their tax audits (regarding personal or corporate income tax but also VAT and other indirect taxes).
The new rules aim to provide the EU Member States’ tax authorities with the information necessary to ensure the enforcement of tax rules regarding commercial activities performed with the intermediation of digital platforms. It introduces standardised reporting requirements for digital platform operators.
The new reporting obligations will apply to operators of both EU and non-EU digital platforms that allow certain sellers (“reportable sellers”) to be connected to other users in order to perform the following (cross-border or domestic) activities:
Reporting will apply regardless of the legal nature of the seller. However, webshop and platforms that only sell their own product are out of scope. The DAC7 reporting obligation aims specifically at situations of intermediation by digital platforms.
Contrary to the draft Directive, investment and lending activities in the context for crowdfunding are not in scope.
The reporting obligation lies on the operators of EU and non-EU digital platforms. Broadly speaking, non-EU digital platform operators may fall in scope of DAC7 only where either (i) there is an EU-based seller and/or (ii) the activities involve the rental of immovable property located in the EU. In such a case non-EU digital platform operators need to register in an EU Member State.
The information to be reported will include information relevant to the correct identification of the seller (e.g., name, registered office, Tax Identification Number, VAT number, date of birth, business registration number, each member State of residence of the seller) and information relevant to the determination of the profits realised by the reportable seller through the platform (e.g., the amount of the consideration paid to the seller and the number of activities for which it was paid, the account number where the consideration is credited, the addresses of the property being rented out and the number of days).
The information should be reported by the platform operator to the competent tax authorities ultimately 31 January of the year following the calendar year in which the seller is identified as a reportable seller. The first information shall be communicated for Reportable Periods as from 1 January 2023. This means that the first DAC7 reporting for this information should take place ultimately 31 January 2024. The receiving EU Member State will then exchange the information received with the tax authorities of the other EU Member States on an annual basis.
Joint audits: new provisions allow for an administrative enquiry jointly conducted by the competent authorities of two or more EU Member States, and linked to one or more persons of common or complementary interest to the competent authorities of those EU Member States.
Group requests: apart from the automatic exchange of information between tax authorities, it is also possible that the tax authorities of an EU Member State make requests to another EU Member State for specific information about a certain taxpayer. DAC7 now makes it possible for tax authorities to also make more general requests that do not concern specific taxpayers but rather certain groups of taxpayers who cannot be identified individually.
Exchange of information with regard to royalties: DAC7 adds to the list of information that tax authorities of the EU Member States will automatically exchange information about royalty payments. The term ‘royalties’ means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films and software, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; payments for the use of, or the right to use, industrial, commercial or scientific equipment shall be regarded as royalties (as provided in the EU Interest and Royalty Directive).
Manager Tax, PwC Netherlands
Tel: +31 (0)61 399 87 29
Maarten van Brummen
Senior Manager, PwC Netherlands
Tel: +31 (0)61 061 65 09
Robert Jan Meindersma
Senior Director, PwC Netherlands
Tel: +31 (0)68 360 84 41
Jasper van Schijndel
Director, PwC Netherlands
Tel: +31 (0)63 072 54 25