About DAC7

Following DAC7, digital platforms are required to collect and verify information on sellers performing a ‘relevant activity’ which is facilitated through the digital platform. Subsequently, provided that all requirements are met, the collected and verified information must be shared with the tax authorities. The tax authorities on its turn will automatically exchange the submitted information with the other Member States (or third countries which implemented DAC7 rules) involved. DAC7 aims to provide those tax authorities with the necessary information to enable them to assess income taxes and value added tax due correctly.

The relevant activities include (i) rental of immovable property, (ii) personal services, (iii) sale of goods and (iv) rental of any mode of transport.

Certain exemptions for this reporting obligation apply. For example, activities carried out by a seller acting as an employee of the platform operator should not fall within the scope of reporting. This also applies for entities of which the shares are regularly traded on an established securities market. Reference is made to our previous article of 13 October 2022 setting out the scope and definitions of the DAC7 directive.

Confirmation State Secretary of Finance

Until recently, it was unclear whether the reporting obligation also applies if an entity, affiliated to the platform, sells its own products via the platform. After all, such affiliated entity is linked to the buyer via the platform. It was already clear that the reporting obligation does not apply if a platform sells products it produces itself (previously described as ‘products own company’). It now follows from the confirmation of the State Secretary of Finance that the term 'company' should be interpreted broadly and should be read as a group. In this context, the term 'group' seems to mean all affiliated entities collectively. An entity is affiliated in case one entity controls the other or both entities are under common control. Control also includes the (in)direct ownership of more than 50%. This clarifies that the sale of products, through a digital platform, by an affiliated entity does not need to be reported pursuant to the DAC7 legislation.

Impact DAC7 on the automotive industry

Digitalization is sparking a lot of innovation within the automotive industry in recent years. For example, the possibility to purchase a car directly from a (manufacturer’s) website is a notable development and growing increasingly common. In addition, mobility sharing platforms are growing in popularity, some of which allow sharing of privately owned or leased vehicles. The transactions on such platforms may qualify as a relevant activity under the DAC7 legislation (i.e., as sale of goods and rental of any mode of transport are in scope). Should no exemptions apply, such transactions may indeed lead to a reporting obligation pursuant to the DAC7 legislation. In that case, the digital platform should collect, verify and report information regarding the sellers.

In our view the recent confirmation of the State Secretary of Finance is very helpful, especially providing clarity to the digitalizing automotive industry. As addressed, an important piece of guidance is that any automotive products sold via a digital platform by a seller affiliated to the platform does not trigger reporting obligations.

What can we do for you?

Our Transparency Team can be of help in clarifying the DAC7 requirements and defining which data needs to be collected and verified. We are also available to assist with the implementation of DAC7 within your group.

Should you have any question, please contact a member of our Transparency Team or your trusted Loyens & Loeff adviser.