Harmonised tax data requests for marketplaces; efficient exchange of data between tax authorities – first reports due 2024 for transactions in 2023
Directive on Administration Cooperation (DAC 7) has been approved by the EU Council. The new digital platform seller rules will come into effect on 1 January 2023 (first report by 31 Jan 2024). This provides for a standard data format for requests by EU tax authorities from digital marketplaces on their third-party sellers’ VAT transactions. This includes the automatic exchange of this data between tax authorities. DAC 7 covers B2C transactions for: goods; services; plus gig and sharing economies.
The The Organisation for Economic Cooperation and Development (OECD) has followed this plan to issue OECD optional marketplace reporting guidance for countries
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Aims of the DAC 7 administrative agreement include:
- Identifying online merchants not properly declaring and paying VAT
- Providing for a consistent and efficient set of requirements for marketplaces to avoid them having not manage different requests and duplicate questions
- Legal ability for tax authorities to work together on joint audits on seller activities from 1 January 2024
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Scope of DAC 7 supplies – goods, gig and sharing economies
The new rules will apply where marketplaces’ merchants or users provide any of the following:
- Personal services
- Sale of tangible goods
- Rental of EU-located property, parking spaces etc
- Rental of transport
DAC aid exchange of VAT data for application of EU VAT Directive
DAC is a set of EU-level legal rules which provide for guidance on the electronic exchange of any data in the furtherance of compliance with domestic laws. It represents an amendment to the EU VAT Directive – the seventh since the 2011 Directive 2011/16/EU.
DAC 7 obliges marketplaces to provide data on their third-party sellers’ transactions, covering
- Sales of goods
- Provision of personal services
- Rentals of property, including house sharing
- Rental and sharing of transport
The information on the above supplies to be provided includes:
- Name and address of merchant
- VAT number
- Tax identification number
- Taxable supplies and income in calendar year
Starts 2023; first report due 31 January 2024
The new DAC7 tax rules will apply to digital platforms operating both inside and outside the EU from 1 January 2023. Annual reports are required by the end of the first month following the reporting year. The first DAC 7 report is therefore due by 31 January 2024.
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OECD follows EU lead on marketplace reporting