EU Sends Notices to Member States Over DAC7 Violations

EU Cracks Down on DAC7 Violations: Learn why Germany, Hungary, Poland, and Romania are under fire for not sharing online platform income data and what this means for tax compliance across the EU.

DAC7REGULATORY ACTIONS

7/26/20241 min read

The European Commission (EC) has issued warnings to Germany, Hungary, Poland, and Romania for failing to share information about income earned through online platforms. This is in violation of DAC7, an EU regulation effective from January 1, 2023, designed to improve tax transparency and compliance.

What is DAC7?

DAC7 is the seventh amendment to the Directive on Administrative Cooperation in taxation, effective from January 1, 2023. It mandates online platforms such as marketplaces, gig economy apps, and rental services to collect and report detailed income information about their users. The regulation aims to enhance tax transparency, combat tax evasion, and ensure fair taxation across the EU.

Key Components of DAC7
  1. Scope and Applicability: Applies to various online platforms facilitating sales, services, and rentals. Targets both EU-based and non-EU-based platforms with EU users.

  2. Data Collection Requirements: Platforms must collect detailed user information and transaction details. This information must be compiled and reported annually.

  3. Reporting Obligations: Platforms must report income data for 2023 by the end of the year. Data must be shared with EU tax authorities by February 28, 2024.

Objectives of DAC7

The main goals are to improve tax collection, enhance cooperation among EU member states, and promote fair competition by ensuring all economic activities are subject to the same tax rules.

Current Situation

Germany, Hungary, Poland, and Romania missed the February 28, 2024, deadline to share this information. The EC has given them two months to respond and rectify the issue. Failure to comply may lead to further action by the EC. Stay tuned for updates!