1. Background
Council Directive (EU) 2021/514 sets out specific due diligence and reporting obligations for digital platform operators (the so-called DAC7 Directive). Member States are required to implement the DAC7 Directive into national law by December 31, 2022. On July 12, 2022, the Federal Ministry of Finance submitted a draft law on platform reporting obligations and information exchange (PMAustG) to implement the DAC7 Directive. In line with this, operators of digital platforms are required to report to tax authorities information on revenues generated by providers on these platforms. The Act on Platform Reporting Obligations and Information Exchange will enter into force on January 1, 2023.
2. Affected platforms
All so-called platform operators are subject to the obligations of DAC7. This term covers any digital-based system that allows users to communicate with each other via the Internet using software and enter into legal transactions aimed at (1) providing relevant activities by suppliers to other users, or (2) collecting and paying remuneration. related to the relevant activity. It does not include platforms that (1) process payments in relation to relevant activity, (2) exchange relevant activity or advertise relevant activity by users, or (3) redirect users to the platform.
3. Activities subject to reporting obligation
Notifiable activities are (1) the temporary transfer of use and other rights of all kinds to real estate, (2) the provision of personal services, (3) the sale of goods, and (4) the temporary transfer of use and other rights of all kinds relating to transportation.
4. Reportable information
If suppliers transfer the usufruct and other rights to real estate for a limited period, platform operators are required to provide further information (e.g. addresses of the real estate advertised).
5. Due diligence obligations for platform operators
Platform operators are required to collect reportable information and locate the provider. In addition, platform operators need to check the reliability of some reportable information (the seven items mentioned at the outset in the list above). If a Member State or the EU provides a free electronic interface to validate the Tax ID or VAT ID, platform operators must use it.
6. Reporting procedure
Information must be reported electronically to the German Federal Central Tax Office in accordance with an officially required dataset by means of remote data transmission via officially defined interfaces. The report for a given calendar year should be submitted by 31 January of the following year at the latest. Incorrect, incomplete or late reporting is an administrative offense and may be subject to a fine of up to € 50,000.
7 Recommendation for action
Reporting obligations under DAC7 initially result in additional administrative obligations for the platform operators concerned. Article 22f of the German VAT Act already lays down specific obligations for operators of electronic interfaces (e.g. online marketplaces) to keep records of the supply of goods from online sellers to customers. However, the information to be reported under DAC7 goes far beyond that to be recorded under Art. 22f of the German VAT Act. In addition, not only online marketplaces that support the delivery of goods fall within the scope of DAC7, but also platforms through which providers can, for example, provide rental services or provide personal services. The affected platform operators should now review their current practice of capturing relevant information and adapt it to the new requirements by the end of the year. Platform operators may also engage a third party service provider or another platform operator to fulfill their due diligence obligations.