Reading time: 4 minutes.
In the article you will learn:
- the current stage of the DAC7 implementation in Poland,
- the data of sellers to be collected by digital platform operators,
- how to prepare for the new reporting obligations.
Senior Tax Manager at RSM Poland
Poland is introducing regulations that will impose new reporting obligations on digital platform operators. Sellers should also pay attention to these changes, as they can expect more inspections to be carried out by tax authorities in order to verify the correctness of tax settlements.
The government is introducing regulations regarding new reporting obligations, as well as the obligation to exercise due diligence, based on the EU Council Directive 2021/514 of 22 March 2021 (DAC7). EU Member States – including Poland – should incorporate the above-mentioned provisions into their legal system by the end of 2022, as they should apply starting from 1 January 2023.
What is the current stage of the DAC7 implementation in Poland?
The Ministry of Finance published the assumptions of the regulations implementing the provisions of the DAC7 Directive on 11 July 2022. Then, the legislator conducted public pre-consultation, finalised on 24 July 2022.
Work on a draft act that will incorporate the DAC7 directive in the Polish legal system is currently underway.
What is a digital platform according to the new regulations?
The DAC7 Directive defines a digital platform as any software in the form of a website or application (including a mobile application) that is accessible by users and allows sellers to be connected with other users for the purpose of carrying out the so-called “relevant activity” – directly or indirectly, to such users.
Who is a digital platform operator?
EU regulations indicate that the operator of a digital platform is any entity that acts as an intermediary on a given platform between the seller and users and allows the seller to perform the so-called “relevant activities”.
Let us note here that – according to this interpretation – the operator of a digital platform may also be an entity that (through its own digital platform) provides users not only with its own goods and/or services, but also additionally goods and/or services of trading partners.
Who is the seller?
The provisions indicate that the seller is a platform user – an individual or entity (i.e. a legal person, an organisational unit without legal personality or a legal agreement, in particular such as a trust) – registered at any moment during the reportable period on a given platform and carrying out a “relevant activity”.
The DAC7 Directive also indicates the sellers whose data will be excluded from the reporting obligation.
What information is subject to mandatory reporting?
As we already know, the new reporting obligation will cover those digital platform operators who, against compensation, make it easier for sellers to perform the “relevant activities”. This wording covers the following actions:
- rental of any residential and commercial immovable property, including parking spaces;
- provision of a personal service;
- sale of goods ;
- rental of any mode of transport.
Those platform operators who operate in the manner indicated by the new regulations will be required to provide the tax authorities with data of the sellers.
DAC7 also imposes an obligation on digital platform operators to comply with due diligence procedures, which include determining the status of the seller and confirming the credibility of the information provided by them.
Let us note that although the reporting obligation introduced by the DAC7 regulation will rest with the operators of digital platforms (and the operators will bear the consequences of failing to meet this obligation), the subject of reporting will be the income obtained by sellers.
The new regulations are so comprehensive that not only operators but also sellers operating via digital platforms should familiarise themselves with their scope.
What data on sellers will platform operators collect?
The new regulations oblige platform operators to collect information concerning both individuals and other entities. The scope of the data required by DAC7 will, however, vary – everything will depend on the type of activity performed with the use of the platform.
Basic information on entities and individuals that will be collected by operators as part of all “relevant activities” (regardless of their type) are:
- the legal name or the first and last name of the seller,
- primary address,
- any TIN issued to the seller, including each Member State of issuance (or – in the absence of TIN – the seller’s place of birth),
- the seller’s VAT identification number (where available),
- the seller’s business registration number or the seller’s date of birth,
- information on the existence of a possible permanent establishment through which relevant activities are carried out in the EU (with indication of each respective Member State where such a permanent establishment is located).
Platform operators will also provide tax authorities with information on the sales volumes of individuals and entities and the location of immovable property used by sellers to provide services. This means that the tax authorities will gain another tool with which they will control the correctness of seller’s tax settlements.
Why should you bear this in mind and prepare yourself properly? In our opinion, tax authorities will pay close attention to sellers declaring a low tax base compared to the number and value of transactions concluded via digital platforms.
How to prepare for the new reporting obligations?
Due to the fact that Poland must implement the DAC7 regulations by the end of 2022 (for the regulations to apply from 1 January 2023), we strongly recommend that you check if you fall under the definition of a digital platform operator. If so, it is high time to contact a specialist and start preparations for the implementation of solutions enabling the proper fulfilment or reporting obligations while maintaining due diligence.
If you have any questions or concerns – please do not hesitate to contact us.
Subscribe to RSM Poland Newsletter to stay up-to-date on the most important legal, financial and tax matters.