On 22 March 2021, the European Council adopted the amendments to the directive on administrative cooperation in the field of taxation (‘DAC7’) to strengthen tax cooperation and address the challenges posed by the digital platform economy.
The amendments create an obligation for digital platform operators to report the income earned by sellers on their platforms and for member states to automatically exchange this information. This will allow national tax authorities to detect income earned through digital platforms and determine the relevant tax obligations. The new rules will cover digital platforms located both inside and outside the EU. João Leão, Portugal’s Minister for Finance, states in the press release of the EU Council that: This is an important update of the EU rules, which will help to ensure that sellers who are active on digital platforms also pay their fair share of tax.
Based on the latest publication of the DAC7 rules Member States shall adopt and publish, by 31 December 2022, at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. The deadline for implementation of the DAC7 rules have thus been extended by one year compared to the initial proposal. In this regard, the first reportable period will start on 1 January 2023 and as the information must be reported in a Member State no later than 31 January of each calendar year the first reporting deadline on the basis of DAC7 will be on 31 January 2024.
For more information on the amendment of the directive on administrative cooperation in the field of taxation, we refer to our earlier article on 12 February 2021.