DAC7 requires Platform Operators to collect, validate, store and report certain information about (Relevant Activities of) the sellers using their platform. A Platform Operator for DAC7 purposes is an operator of a website, a mobile application or any type of software that allows sellers to be connected to other users for the purpose of carrying out a Relevant Activity. A Relevant Activity is any of the following:
- sale of (tangible) goods,
- rental of immovable property,
- rental of any mode of transport or
- provision of personal services.
As the definitions of Platform Operator and Relevant Activity are not clearcut, we have included some practical examples to illustrate situations where DAC7 could apply.
1. Multi-sided businesses connecting sellers and users
- A Marketplace Y operates a website that allows Webshop Owner X to connect and sell its tangible goods to Business Client Z and others. Marketplace Y would be considered a Platform for DAC7. The website of Marketplace Y allows sellers (Webshop Owner X) to connect with customers (Client Z and others) for the sale of (tangible) goods.
- Jobs Platform B enables House Owner C to contract Gardener A to conduct gardening activities at his house.
Jobs Platform B would be considered a Platform for DAC7. The website of Jobs Platform B allows seller (Gardener A) to be connected with a customer (House Owner C).
- Members of Fitness Club B can book personal training sessions with independent Personal Trainer A through the website of Fitness Club B.
Fitness Club B would be considered a Platform Operator for DAC7. The website of Fitness Club A allows sellers (Personal Trainer A) to be connected with customers (Fitness Club Members).
2. Businesses ‘buying-in’ and re-selling services from third parties
- Taxi Operator B uses its website to on-sell taxi services supplied by Taxi Company A to Consumer C
Taxi Operator B might have to be considered a Platform Operator for DAC7.
The website of Taxi Operator B allows sellers (Taxi Company A) to be connected with customers (Client C). According to the OECD Model Rules, a Platform also exists whenever the Platform Operator first purchases the relevant services from the seller and then offers these services in its own name to the users.
The DAC7 definition of a Platform seems to require that sellers are registered on the website as to be connected to users. In that case, if Taxi Company A is not required to register on the website of Taxi Operator B as to be connected to Consumer C, Taxi Operator B would not be a Platform under DAC7.
3. Entities within a group facilitating the sale of goods or services from/to third parties
- Group Company Y operates the global website of the group. Clients can order goods through this website. A Local Operating Company X of the group concludes the sales of the goods with the clients.
It is unclear whether Group Company Y qualifies as a Platform Operator. This is because, to be deemed as a Platform, Group Company Y would need to allow Sellers to be connected to other users for the purpose of carrying out a “Relevant Activity”. Although activities “carried out by a seller acting as an employee of the Platform Operator or a related entity of the Platform Operator” are not regarded as a Relevant Activity under DAC7, it is not clear if all activities of a related entity or, rather, if merely activities of sellers who are employees of the related entities are excluded.
- A Procurement Company X within a multinational group operates software that allows third party service providers from all over Europe to register and offer their personal services to EU group entities.
Depending on the interpretation of the DAC7 provision referred to in the previous example, The Procurement Company X could be considered a Platform for DAC7 as it allows sellers (third party contractors and service providers) to be connected with EU group entities.
- Company X operates the global website of a global Fast Food group. Clients can order their hamburgers through this website. The Local Franchise Companies conclude the sales of the fast food with the clients.
Company X would be considered a Platform for DAC7, as the website of Company X allows third party sellers (Local Franchise Companies) to be connected with customers (Clients).
4. Businesses intermediating in the rental of immovable property
- Holiday Park Operator A provides vacation accommodation to Customers. Some of these dwellings are owned by Third Parties. Holiday Park Operator A facilitates the rental of these vacation accommodation owned by Third Parties to individual clients via its website.
Holiday Park Operator A would be considered a Platform for DAC7 when it intermediates in the rental of accommodation. Pursuant to the OECD Model Rules, Holiday Park Operator A might also have to be considered a Platform for DAC7 when it on-sells the rental of vacation accommodation.
5. Businesses with mix activities and several service lines
- Bank A offers several financial services via an app. Through the same app Clients can buy goods from Merchants with loyalty points.
Bank A is a Platform Operator for DAC7, as it connects the clients with the Merchants for sales of goods via its app.
- An Online Seller of consumer electronics sells its own goods via its website. At the checkout, it offers customers the possibility to buy an additional guarantee for the purchased goods from Insurance Company B.
It is not clear if insurance services qualify as a Personal Service for DAC7. If this would be the case, the Online Seller would be a Platform Operator in respect of the guarantees sold by Insurance Company B.
- Travel Client A books his vacation, including flight and hotel accommodation offered by third parties, through the website of Travel Agent B.
Travel Agent B would be considered a Platform Operator for DAC7. The website of Travel Agent B allows sellers (e.g. accommodation or tourist services providers) to be connected with Travel Client A for the provision of different Relevant Activities.
Besides online marketplaces and app stores, business in traditional industries can also fall within the scope of DAC7. This is the case if they connect third party sellers and users through their website for the performance of Relevant Activities.
Companies will have to perform a DAC7 analysis of the business models and business lines applied. Loyens & Loeff can help you understand if your business is impacted by DAC7 and, if so, help you prepare to be compliant to the obligations imposed by DAC7.
For more information about DAC7, please see our previous posts or contact a member of our Transparency Team or your trusted Loyens & Loeff adviser.