DAC7 reporting

New DAC7 reporting obligations for online platforms comes into effect

January 31, 2023 in European VAT, International VAT, News, VAT

New DAC7 reporting obligations for online platforms comes into effect

On 1 January 2023, the DAC7 came into effect in the EU, making online platforms liable for reporting seller’s income on an annual basis.

This new reporting requirement was adopted by Member States as part of an amendment of the Directive on administrative cooperation in the field of taxation (DAC).

EU countries had until the end of 2022 to transpose these new rules into their national legislation.

Under the DAC7, digital platforms are required to report information on certain sellers using their interface to make reportable cross-border taxable supplies in the EU. The authorities will be using these reports moving forward to compare the data with VAT reports and track down any non-compliant activity.

The activities covered by the reporting obligation are the sale of goods, the rental of mode of transportation, the supply of personal services and the rental of immovable property.

The new obligation also applies to non-EU online platforms facilitating supplies for EU-based sellers notably. This means that all marketplaces facilitating supplies of goods and services in the EU may be within the scope of this new reporting liability.

To comply with their new reporting obligations, digital platforms will need to identify reportable sellers, perform due diligence, and inform their sellers when their information is to be reported to the authority.

Reportable data needs to be submitted to the authority by the 31st January of each year following a calendar year. This means that the first DAC7 return will be due by platforms by the 31st January 2024 in respect of the year 2023.

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