What is the DAC7 directive?
Before we go into detail about what DAC7 is, we need to explain a few terms.
Chronology of documents
In February 2011, Council Directive 2011/16/EU on administrative cooperation in the field of taxation appeared. The primary objective of the directive was to establish the principles of cooperation between EU Member States in the context of ongoing globalization. The document specifies how members of the tax administrations of European Union countries will exchange information in order to properly tax entities operating in the Community.
In March 2021, EU Council Directive 2021/514 amending Directive 2011/16/EU on administrative cooperation in the field of taxation was published. It is this document that we call the DAC7 Directive.
In April 2024, the Council of Ministers adopted a draft act amending the Act on the exchange of tax information with other countries and certain other acts. This project aims to change Polish law in such a way that it also implements the EU provisions contained in the DAC7 directive.
Objectives of the DAC7 Directive
The primary goal of the EU document (as well as national regulations implementing the provisions of the directive) is to develop common rules that will significantly increase the effectiveness of detecting and counteracting tax fraud. The means to achieve this goal is to be common financial reporting. Under it, digital platform operators will be obliged, among other things, to report income obtained through the said platforms. Ultimately, this obligation will apply to all European Union member states.
Who are the digital platform operators?
DAC7 introduces several new obligations for digital platform operators. This term covers all types of platforms that provide sellers with the opportunity to:
- carrying out sales transactions of goods,
- providing services,
- providing means of transport,
- providing real estate or shares in real estate.
Therefore, all types of marketplaces, such as Allegro.pl, OLX, Vinted or Otomoto, are a digital platform.
New reporting obligations arising from the DAC7 directive
According to the regulations, operators will have to provide the National Tax Administration with sets of information regarding sellers using their digital platforms and conducting transactions through them. This data should be provided in electronic form, using the form included in the Public Information Bulletin.
Important!
Although we are all familiar with the principle lex retro non agit (the law does not work retroactively) or lex prospicit non respicit (the law looks forward, not backward), the provisions of the DAC7 directive are one of the exceptions where new legal principles require reaching back. Reporting will cover not only the entire year 2024, but also 2023.
Why will DAC7 work backwards?
The answer to this question is quite simple – European Union member states have undertaken to implement the provisions of the DAC7 directive by the end of 2022. This deadline was set so that the new rules could be applied already in January 2023.
In recent years, several bills have been developed to implement the new regulations, but none of them has been passed. This provoked a reaction from the European Commission, which called on Poland several times to immediately implement the DAC7 directive. Currently (as of May 28, 2024), the Ministry of Finance has presented a project that was adopted by a majority of votes and everything indicates that the date of entry into force of the regulations – July 1, 2024 – is not at risk.
What data is the operator obliged to provide?
What is particularly important for sellers on digital platforms is what specific information they will have to share. The list includes:
- first name and last name,
- address,
- date of birth,
- company name,
- NIP number,
- VAT number,
- bank account number,
- amount of remuneration received,
- amounts of taxes paid.
But that’s not all. Depending on what exactly the seller is selling or what services the seller provides, it may be necessary to provide more information. In the case of car sales, this may include additional data regarding vehicle insurance. Property providers (for example for short-term rental) will, in turn, have to share data on the number of days during which the property was made available to third parties.
Each digital platform operator must also take into account applicable regulations related to GDPR (GDPR) – ensure due diligence, implement procedures for securing and processing personal data, etc.
Deadlines in the bill
The new regulations are to come into force on July 1, 2024. Taking into account the fact that – as we have already mentioned – in this case the law will apply retroactively, operators must verify whether in the period from January 1, 2023 to June 30, 2024, they met the criteria thanks to which they could be considered reporting platform operators. If so, two additional deadlines apply:
- until December 31, 2024, these entities should ensure compliance with due diligence procedures towards sellers who were registered as users of the platform during the mentioned period,
- by January 31, 2025, these entities must complete all prescribed reporting procedures.
Which entities will not be subject to the reporting obligation?
The legislator also provided for a certain exception to the rule – it applies to sellers who completed less than 30 transactions in a calendar year and whose remuneration for the sale of goods or services did not exceed the equivalent of EUR 2,000. So we are talking about occasional sellers. Such taxpayers will not have to report their income to the National Tax Administration.
What are the penalties for failing to fulfill obligations?
Operators of digital platforms, who are responsible for obtaining information and submitting it to the director of the National Tax Administration, are subject to specific penalties for failure to fulfill their obligations.
The current draft regulations provide for the possibility of a fine ranging from PLN 100,000 to PLN 5,000,000. Moreover, in some cases, the new rules allow for the possibility of imposing a penalty in the form of deleting the entity from the VAT register.
Will DAC7 have a direct impact on sellers?
At the moment, the situation does not indicate that the scope of obligations of sellers themselves will expand with the EU document. However, it is possible that in the future the operators themselves will introduce some changes, for example in the regulations, in order to effectively obtain all the necessary data from the users of their platforms.
