Year end is approaching. Digital platform operators should be mindful of the upcoming deadlines.
As a platform operator, it’s crucial to keep an eye on the reporting obligations in and outside of the EU.
In March 2021 the Council of the European Union adopted new transparency rules and disclosure obligations for digital platforms, also known as “DAC 7”. These rules entered into force on 1 January 2023. So 2024 is the second year of reporting, don’t miss out!
What is this about?
In essence this directive aims to enhance transparency within the European Union regarding the income of sellers generated via so-called online platforms. To achieve this, a reporting obligation is introduced for platform operators to provide certain information about the sellers and the consideration received by them to the government. Additionally, DAC 7 imposes due diligence obligations, specifies penalties for non-compliance, and outlines reporting deadlines for platform operators. It has significant implications for digital platform businesses operating within the EU and necessitates substantial process and system changes to ensure compliance.
Upcoming DAC 7 deadlines for the 2024 reporting period
To ensure compliance with DAC 7, platform operators must adhere to the following deadlines for the 2024 reporting period:
31 December 2024: Platform operators must complete their due diligence procedures for the calendar year 2024. This involves collecting and verifying the relevant information about the sellers using their platforms, ensuring the reliability and completeness of this data.
31 January 2025: The reporting obligation must be fulfilled by this date. Platform operators are required to submit the collected data to the relevant tax authorities. This information will then be automatically exchanged between EU Member States.
There are additional reporting obligations for sellers that onboarded before 2023
For platform operators who for the 2023 reporting period chose to limit their due diligence and reporting obligations to sellers onboarded during 2023, it is essential to note the additional requirements to be met now for sellers onboarded before 2023:
31 December 2024: Platform operators must perform due diligence for the sellers who were onboarded before 2023. This means that operators need to review and verify the information for these sellers to ensure it is up-to-date and accurate.
31 January 2025: A corrective DAC 7 declaration must be submitted by 31 January 2025 for the 2023 reporting year. This declaration should now also include the activities during 2023 for sellers onboarded before 2023. This corrective declaration ensures that the DAC 7 declaration for 2023 will be complete and an accurate representation of the sellers’ activities on the platform.
Global implications of similar DAC 7 reporting obligations
It is important to be aware that other countries outside the EU, such as Canada, the UK, etc are also implementing similar reporting obligations. This indicates that the impact on your business could extend beyond the EU if you are active in these countries.
Given these developments, it is crucial for platform operators to stay informed and prepared for compliance requirements in all relevant jurisdictions where they are active. This may involve coordinating with local tax advisors, updating internal processes and systems, and ensuring that all necessary data is accurately collected and reported.
Key Takeaways
- Upcoming Deadlines: Ensure you meet the due diligence obligation by 31 December 2024 and the reporting obligation by 31 January 2025.
- Corrective Actions: If last year you limited your due diligence and reporting obligation to the 2023 sellers, remember to perform the required due diligence and file a corrective declaration also including the sellers onboarded before 2023.
- Global Reach: Be aware of similar reporting obligations being implemented in countries outside the EU.
In case you would like to know more about the DAC 7 reporting obligation or if you have a client which might be in scope, please reach out to Pieter Deré, Niels D’Hondt or Elisa Debersaques.
