31/01/23

EUROPE: Majority of EU Member States miss DAC7 deadline.

As published on step.org/industry-news, Monday 30 January, 2023.

Fourteen EU Member States have missed the official deadline set for transposing Council Directive (EU) 2021/514 (DAC7) into national law.

DAC7 requires digital platforms to report the financial affairs of customers who sell goods, offer online and offline personal services or rent out immovable property or means of transport. It was adopted in March 2021 and Member States were given until 31 December 2022 to incorporate it into their national law, with implementation to begin immediately after that date.

Reporting of seller data must take place by 31 January of the year following the calendar year in which the seller is identified; in other words, by 31 January 2024 for those sellers identified in 2023.

However, Belgium, Croatia, Cyprus, Estonia, Greece, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Slovenia and Spain have not met this deadline. Accordingly, the European Commission (EC) is sending them a letter of formal notice.

These countries now have two months to reply and complete their transposition or potentially receive a 'reasoned opinion' from the EC. Germany missed receiving such a letter by a margin of only two weeks, its Federal Council having approved the implementing law on 16 December 2022.

DAC7 requires relevant transactions to be reported regardless of whether they are cross-border in nature or the legal nature of the seller. Information to be reported will include identification of the seller, country of residence, seller's profits or turnover, bank account details and details of property rented out.

In principle, reporting obligations will not be linked to the residency of the digital platform operators but rather to the residency of the end user. However, non-EU platforms are exempt from reporting to EU tax administrations if they certify that the same information is collected in their own jurisdiction and adequate arrangements exist to ensure its exchange with an EU Member State.