DAC7 Directive was adopted on 22 March 2021. DAC7 is a tax directive that includes collecting and processing data on merchants and their income that operate through digital online marketplaces and other platforms. This law aims to improve tax cooperation between EU member states through digital platforms, including transparency on revenue earned by sellers.
Merchants will be required to report all commissions they receive from their activities.
However, not all platforms are subject to the directive – there are exceptions. For example, platforms where payment flows are not processed, but goods or services are only displayed, were exempted.
The aim of the directive was to collect information on business of certain sellers conducting so-called relevant activities through particular digital platforms. Relevant activities include:
- rental of real estate
- provision of personal services
- sale of goods and
- rental of means of transport.
New regulations primarily apply to operators of digital platforms incorporated or managed in the EU and tax residents in the EU engaged in relevant commercial activities.
In practice, digital platforms are required to report income earned by sellers on the site. There is however a threshold for the sale of goods. If you have carried out more than 30 transactions or received a higher consideration than € 2,000 per year, the platform must report on you.
DAC7 Directive was supposed to be introduced by EU member states until 31 December 2022. What is the status of the implementation in CEE region?
- Poland – the implementation was already postponed a few times; the newest version of the project of the act was announced on 13 February 2024; the Polish Ministry of Finance assumes that the regulations will enter into force as of 1 July 2024 which would mean that the first reporting deadline would fall on 31 January 2025;
- Czech Republic – The implementation was completed in the Czech Republic during 2022. The initial deadline to submit the report was set for January 31, 2024, so data collection began in 2023. However, there were problems with the submission process. The Tax Authority wasn't well-prepared with technical tools. The report has to be submitted via the tax administration portal using an XML file. Creating this file requires expertise. Technical issues had to be resolved with the tax office.
- Slovakia - Within the Amendment to the Act No. 442/2012 on international cooperation in tax administration as amended approved by the Slovak Parliament on 15 June 2022, DAC7 Directive was implemented within the deadline for implementation and took effect on 1 January 2023. The respective Amendment also introduces provisions concerning joint tax audits (took effect on 1 January 2024). The first reporting deadline was on 31 January 2024.
- Hungary - From 1 January 2023, DAC7 reporting and due diligence rules for platform operators came into force in Hungary. The first reporting period is 2023 and the first reporting deadline was 31 January 2024. On January 24, 2024, the Hungarian tax authorities published guidance providing clarifications on the Hungarian DAC7 implementation law (i.e., clarifications on the term platform operator, notification of changes in the reported data, registration procedure, and data provision). Concerning failures to notify, fines will be imposed up to the amount of HUF 2 million (approximately EUR 5,000).
Should you sell goods through digital platforms and need to discuss in details potential implications of these regulations on your business, please feel free to reach out to us.
