New European DAC7 Directive on Administrative Cooperation (JOINSON&SPICE)

January 24, 2023 - JOINSON&SPICE

This is a thought leadership article from PrimeGlobal member firm JOINSON&SPICE in the Netherlands about the new European Directive on administrative cooperation in the field of taxation, DAC7, and the requirements this holds for plaform operators and sellers using these platforms.

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What is DAC7?

DAC7 is a European Directive that is an addition to the already existing Directive 2011/16/EU on administrative cooperation in the field of taxation.

It requires platform operators (companies that offer digital platforms for sellers to offer products or services) to collect, verify, and report data on sellers using their platform.

The Directive aims to ensure that sellers fully disclose their income from digital platforms in their tax returns and to provide tax authorities with visibility into sellers' income.

As of January 1, 2023, certain platform operators will be required to provide information to the tax authorities of the EU Member State where the seller resides and, if the seller rents out a real property, to the competent authority of the EU Member State where the property is located.

Platform operators must also inform their sellers about which data they are providing to the tax authorities. No later than January 31, 2024.

The reported data is to be used for both income tax and VAT purposes. This may help tax authorities to trace and detect taxable events in the digital economy, because they would be able to use this data as counter information for income tax and VAT return purposes.

What is a digital platform?

A digital platform is any software, such as a website or app, that enables sellers to connect with users of that software to carry out a relevant activity*. This also includes everything necessary for payment (collection and payment) of consideration in relation to the relevant activity.

What is a platform operator?

A platform operator is an entity that enters into an agreement with sellers, which specifies that the operator makes the platform available to the sellers in whole or in part.

If the platform operator is a tax resident of an EU Member State the platform operator is required to collect, verify, and report data on sellers using their digital platform.

If the platform operator is not a tax resident of an EU Member State the platform operator must collect, verify, and report data on sellers if:

  • the platform is established according to the legislation of an EU
    Member State
  • the (actual) management of the platform is located in an EU Member State
  • the platform has a permanent establishment in an EU Member State

Which information must be reported?

There is a specific set of data that must be reported including your 'Own data' and the 'Sellers' data', details of which can be found in the presentation below.

        What is a seller?

        A seller on a platform is a natural person or entity who is a resident of an EU Member State or who rents out real property located in an EU Member State and who is registered on the platform and carries out a relevant activity with consideration during the reporting period.

        Please find below the summary of the European DAC7 Directive from JOINSON&SPICE.

        Please contact Mark Muller with any questions regarding this new Directive.

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        JOINSON&SPICE is a young accountancy firm, specialising in Technology, Media and Telecom. Our team varies from young post-graduates to experienced chartered accountants (in Dutch: RA) and accounting consultants (AA). The thing that brings us together: a passion for technology companies. With years of knowledge and experience stemming from a genuine interest in our specialities, we enjoy connecting with our customers and aiding in the growth of their companies. We believe in an equal partnership where sharing knowledge is paramount. Within the sub-sector of Technology we help data centres, hosting providers, software providers, system integrators, cloud providers and online retailers with important decisions.

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