DAC7 bill – digital platform operators with new obligation

The DAC7 Directive is nothing but new obligations for the e-commerce sector and the latest wake-up call for some small and medium-sized entrepreneurs. On April 2024, the Government made another attempt to implement the EU directive and passed the DAC7 bill. The law introduces an obligation on digital platform operators to collect and report information on sellers trading through these platforms.

When can we expect the announced changes?

December 31, 2022 was the last day for member states to implement the DAC7 directive. The Polish legislature has so far failed to pass a specific law. For this reason, in the middle of last year, the European Commission initiated proceedings against Poland. On April 9, the Ministry of Finance communicated that the new regulations are likely to take effect from July 1, 2024.

What is the DAC7 Directive and how will it affect the e-commerce sector?

The DAC7 Directive affects digital platform operators, but also small entrepreneurs doing business via the Internet. The directive imposes an obligation on digital platform operators to collect and report information on sellers who transact via these platforms. The practical sense of the expressed obligation is as follows. Operators of websites or mobile apps will be required to provide national authorities with information on vendors operating on their platforms. This is a mechanism that serves as a way for the EU regulator to combat tax evaders. According to the legislator, such a solution is intended to level the playing field between vendors operating in the traditional manner and those operating via digital platforms, as well as between those reliably paying taxes and those who evade taxes.

Who is affected by the DAC7 law?

The statutory obligation to collect and report information on sellers who transact via a digital platform is expected to apply to entities such as:

1. online sales platforms (e-commerce), e.g., Vinted,
2. accommodation booking platforms, e.g. Booking,
3. platforms for renting transportation,
4. platforms for ordering car rides, such as Uber .

Operators of digital platforms will not have to report and submit information on vendors who have made fewer than 30 transactions through a particular website or mobile app, with total remuneration of less than €2,000 in a given year.

Note that DAC7 also applies to entrepreneurs who do business in the digital space. The bill is a kind of final wake-up call for those who evade tax obligations despite conducting such gainful activity. Already, probably from July 1, 2024, the National Tax Administration will be in possession of sufficient data to verify the fiscal legality of a given business. So the bill imposes a direct reporting obligation on digital platform operators, which indirectly hits small and medium-sized businesses.

What will the reporting look like?

Digital platform operators will be subject to mandatory reporting of vendors’ personal and transactional data to the Head of the National Tax Administration. This information that will be collected and reported includes:

• name / company,

• address,

• TIN or PESEL,

• amount of total remuneration,

• the number of transactions,

• number in the relevant business register.

Huge fines.

The draft law provides for fines of up to PLN1,000,000 for failure of digital platform operators to comply with reporting obligations.

Conclusion.

DAC7 is a mechanism to audit the e-commerce sector for tax transparency. An EU directive and draft law impose reporting obligations on digital platform operators, failure to comply with which is threatened by sizable fines. This is another step in regulating the e-commerce sector, which lawmakers say serves to control the fiscal transparency of entrepreneurs operating in the digital space.