The EU Directive DAC7 on cooperation in the field of taxation comes into force. It imposes new reporting obligations on digital platform operators. The aim is to fight tax avoidance. Check out what you need to know about the DAC7 directive!
Directive DAC7 – what is it?
The DAC7 directive is a regulation of the European Union. It imposes new reporting obligations on digital platform operators. It aims to increase tax transparency and fight tax evasion. It mainly applies to platforms that enable:
- sale of goods,
- rental of real estate,
- rental of means of transport,
- rental of parking spaces.
Implementation of Directive DAC7 into Polish Law
The DAC7 directive is already in force in Poland. The President signed the act implementing it into the Polish legal system on 11 June 2024.
The regulation took effect on 1 July 2024, despite originally being set for 1 January 2023. Despite the delay, the reporting obligation for digital platforms covers the period from 1 January 2023.
Main Assumptions of the DAC7 Directive
Directive DAC7 is part of a broader EU strategy to strengthen and harmonize national tax systems. The primary goals of the DAC7 Directive are:
- obliging digital platforms to report transactions by sellers and service providers;
- enabling national tax authorities to identify persons engaged in large-scale economic activities via digital platforms who are not registered entrepreneurs;
- extending the scope of the EU’s inter-state exchange of tax information.
Objectives of Directive DAC7
According to the legislator’s assumption, the DAC7 Directive aims to:
| improve tax collection in the digital economy sector | – It serves as a tool to fight tax avoidance or evasion. Especially in the context of transactions through digital platforms. |
| increase tax transparency | – The DAC7 Directive imposes reporting obligations on digital platform operators. This is to allow tax authorities to have a better insight into online transactions. |
| facilitate the exchange of tax information between EU Member States | – The DAC7 directive extends the scope of inter-state exchange of tax information, – It creates an EU mechanism enabling the exchange of data on sellers |
| better identification of entities doing business through digital platforms | – This concerns especially sectors such as e-commerce, real estate rental or transport services. |
| provide EU tax authorities with instruments to obtain information on transactions made via digital platforms | – This aims to better monitor and control financial flows in the digital economy |
Who is the DAC7 Directive Aimed At?
DAC7 focuses mainly on operators of digital platforms. They allow sellers to offer goods and services to customers through their interfaces. The reporting obligations apply to digital platforms that facilitate:
- rental of real estate,
- provision of services by sellers,
- sale of specific goods,
- providing means of transport.
The reporting obligation applies to sellers who, during the year:
- exceed the threshold of 2000 euros
- or complete more than 30 transactions.
Who is excluded from the DAC7 Directive?
It is worth noting that not all users of digital platforms are subject to the reporting obligation. It will not apply to:
- government entities,
- listed companies,
- landlords of real estate who exceeded 2000 lease transactions in the reporting period,
- sellers who made no more than 29 transactions in a reporting period and generated revenue below 2000 EUR.
These exclusions aim to focus on the most active participants in the digital market.
Data subject to DAC7 reporting
Digital platform operators must report the following user data to the relevant authorities:
| For sellers who are entrepreneurs | – Company name – Main registered address – Tax identification number – Country that issued the tax identification number – VAT number (if applicable) |
| For sellers who are natural persons | – name and surname – address – tax identification number – VAT number (if applicable) |
| Financial information | – commissions received by the platform – taxes and other public law charges collected by the platform operator – total amount of remuneration received by sellers using the e-commerce platform |
The data enable tax authorities to better control transactions made through digital platforms. Their goal is to ensure greater transparency in e-commerce.
Directive DAC7 – sanctions
The EU has imposed severe financial sanctions for non-compliance with the new regulations. These fines can reach up to 1 million PLN. They may be imposed for various violations, such as:
- failure to provide the Head of the National Tax Administration with the required data,
- failure to implement appropriate due diligence procedures. This includes inadequate collection and storage of records;
- failure to remove irregularities detected during the inspection within the set deadline.
These measures are to ensure that platform operators comply with DAC7 obligations.
Directive DAC7 – What You Need to Know About It. Summary
DAC7 is a new EU legislation that imposes reporting obligations on digital platforms. It aims to increase the transparency of online transactions and fight tax evasion. Implementing DAC7 requires adjustments to systems and processes. The objective is to create a fair tax environment.
If you are interested in the topic of DAC7, please contact our experts!
FAQ – Questions and Answers
What is the Directive DAC7?
DAC7 is EU legislation that imposes reporting obligations on digital platforms. It aims to increase the transparency of online transactions and fight tax evasion.
Who Does the DAC7 Directive Apply To?
It primarily applies to companies operating e-commerce platforms. Yet it also concerns real estate rental services, personal services, and transport services.
What obligations does the DAC7 Directive impose on platforms?
Platforms must collect and provide information about their users (sellers) to tax authorities.
When does the DAC7 Directive come into force?
The directive has been in force in Poland since the 1st of July 2024.
What information do platforms have to report?
Platforms must for example report data on sellers’ identities, revenue, and transactions.
Does the DAC7 Directive apply to all platforms, regardless of size?
No. There are certain thresholds and exceptions. Yet, the most significant platforms will be covered by these regulations.
What are the consequences of non-compliance with the DAC7 Directive?
Failure to comply with the directive may result in financial penalties. It may also bring administrative sanctions.
How will the DAC7 Directive affect platform users?
Users (sellers) can expect control over their online income and more accurate taxation.
Does DAC7 only apply to EU companies?
No. It also applies to non-EU platforms that serve users from European Union countries.
What is the main purpose of the DAC7 Directive?
The main objective is to create a fair tax environment in the digital sector. It focuses on preventing tax avoidance in the digital economy.
