As part of its anti-fraud tax package (see other news), the European Commission proposed on Wednesday 15 July to amend the Council Directive (2011/16/EU) on administrative cooperation in the field of taxation (DAC) to extend the automatic exchange of information to digital platforms such as Uber and Airbnb.
The proposed amendment (DAC7) aims to “make sure those who profits from digital platforms pay tax just like everyone else”, said EU Taxation Commissioner Paolo Gentiloni at a press conference. It will also reduce the administrative burden on platforms, which have to deal with several different national reporting requirements.
In concrete terms, the Commission proposes that platforms should be obliged to transmit once a year to the tax authorities all revenues generated by sellers or service providers using their platform. For example, Uber would be obliged to report all revenues generated by its drivers to tax authorities.
“The rules will apply equally to all platforms”, said Paolo Gentiloni. The obligation will also apply to all sellers, regardless of their legal status. The only exception made is for government entities.
The proposal covers the reporting of the activities of renting of real estate, personal services, sale of goods, renting of any mode of transport as well as investment and lending services through ‘crowdfunding’.
“The directive is not prescriptive on the size of the activity”, a senior European official explained. It is for each Member State to set, if it so wishes, thresholds of activity above which it will or will not make use of these data. “We have tried to avoid having rules that create burdens for the platforms while leaving Member States the choice of having de minimis practices”, he specified.
According to the text, the platform should communicate this information to only one tax administration, namely the competent authority of the Member State in which the vendor subject to the declaration is resident or to the competent authority of the Member State in which the property is situated. This single authority should then redistribute the information, according to certain criteria, to the other Member States concerned.
The proposal is intended to apply to all platforms carrying on business in the EU, even if they are neither resident for tax purposes nor incorporated or managed nor have a permanent establishment in an EU Member State. In the Commission’s view, this would ensure a level playing field between platforms and avoid unfair competition. Foreign platforms will thus be required to register and report this information in a single Member State.
The text also proposes clarifications of existing rules, in particular on joint tax audits and group applications.
The same senior European official was rather confident that the text would be adopted by the Member States under the German Presidency of the EU Council, referring to the June Council conclusions (see EUROPE 12498/34) which called for such an amendment.
See text: https://bit.ly/2WlXIPA (Original version in French by Marion Fontana)