11/12/20

EUROPE: EU Eyeing 2023 Start Date For DAC7.

As published on tax-news.com, Thursday 10 December, 2020.

The EU has agreed new rules that will see member states automatically exchange information on income earned by sellers on digital platforms from 2023.

At a video conference of EU economics and finance ministers (ECOFIN) on December 1, 2020, ministers discussed an agreement reached at a technical level on amendments to the European Council Directive on Administrative Cooperation in the field of taxation (DAC7).

Under the new rules, from 2023 member states' tax authorities will automatically exchange information on income earned by sellers on digital platforms, whether the platform is located in the EU or not. The aim is to prevent tax evasion and avoidance, enhance tax fairness, and foster a level playing field for both the platforms and sellers.

According to the European Commission, these rules should enable national authorities to identify situations where tax should be paid. The changes should also reduce the administrative burden on platforms, which often have to deal with several, different national reporting requirements.

DAC7 is also intended to improve the exchange of information and cooperation between tax authorities. It will become easier to obtain information on groups of taxpayers and improvements will be made to the rules for carrying out simultaneous controls and for allowing officials to be present in another member state during an inquiry. DAC7 will also provide a framework for the competent authorities of two or more member states to conduct joint audits, which will be required to be in operation in member states from 2024 at the latest.

Olaf Scholz, Federal Minister of Finance for Germany, which holds the rotating Council presidency, said: "The digital platform economy is creating new challenges for tax administrations, in particular when services are offered across borders. The new rules on administrative cooperation will offer member states important tools to ensure that sellers on digital platforms pay their fair share of taxes. This is an important step forward in adapting our rules to the digital economy and improving the fight against tax fraud and tax evasion."

The Council is expected to adopt the directive in the coming weeks, once the opinions of the European Parliament and the European Economic and Social Committee have been received and the legal-linguistic revision of the text has taken place.

Since is adoption, the original Directive 2011/16/EU has been amended several times, to include information on financial accounts, on tax rulings and advance pricing agreements, on country-by country reports, on beneficial ownership, on reportable cross border arrangements, and now on digital platforms. Last week, the Commission published proposals to extend the scope of the Directive to include crypto-assets and e-money (DAC8).