The Member States of the European Union reached a political agreement on the proposal (DAC 7) to amend the EU Council Directive (2011/16/EU) on administrative cooperation in the field of taxation (DAC) in order to extend the automatic exchange of information to digital platforms such as Uber and Airbnb (see EUROPE 12528/3). The ambassadors of the Member States to the EU (Coreper) are expected to give their green light on Wednesday 25 November to the adoption by written procedure of the general approach of the EU Council.
At the last videoconference meeting of EU Finance Ministers, German Minister Olaf Scholz urged his colleagues to reach an agreement on this text quickly (see EUROPE 12595/4).
On Friday 20 November, during the videoconference meeting of the Council’s High Level Group on Taxation, no comments were made on the compromise text of the German Presidency of the Council of the EU. Only the Netherlands has reportedly maintained its parliamentary scrutiny reservation.
The draft text, of which EUROPE has received a copy, maintains the substance of the Commission’s initial proposal, i.e., to provide for an obligation for digital platforms to transmit once a year to the tax authorities all revenues generated by vendors or service providers using their platform.
The EU Council text specifies that the reporting obligation should cover both cross-border and non-cross-border activities, in order to ensure the effectiveness of the reporting rules and the proper functioning of the internal market.
It also maintains that the reporting obligation would apply to all platforms, regardless of their legal nature, with the exception of government entities.
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 located.
The Council of the EU also supports a proposal that covers the reporting of the activities of hiring real estate, personal services, sale of goods and hiring of any mode of transport.
Nevertheless, it wished to add a specific provision in order to reduce unnecessary compliance costs for companies involved in the leasing of real estate, such as hotel chains or tour operators. A threshold should be set for these entities, according to the text, for the number of rentals per list of properties from which platforms should be exempted from this obligation, while at the same time providing appropriate safeguards to avoid the risk of abuse.
Foreign platforms
According to the text, the proposal is intended to apply to all platforms conducting 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. Foreign platforms would thus be required to register and report this information in a single Member State.
However, the Council of the EU wished to add measures to reduce the administrative burden on foreign platforms and on Member States’ tax authorities, where agreements have been concluded.
In the latter cases, according to the text, platforms that have made a declaration in a non-EU jurisdiction should be exempted from the obligation to make a declaration in an EU Member State insofar as the information in question relates to activities falling within the scope of the Directive and is equivalent to the information required under the Directive. The tax administration of the non-Member State would then be responsible for sending the information to the tax administrations of the Member States.
To this end, the Commission should, by means of implementing acts, determine whether the information to be exchanged under an agreement between the competent authorities of a Member State and a non-EU jurisdiction is equivalent to that provided for in the Directive. Action by the Commission could also be triggered by a request from a Member State, the text adds.
It also specifies that Member States should determine rules on penalties applicable in case of violation of the provisions by the platforms.
The text also amends other existing provisions of the Directive, in particular on joint tax audits and group applications.
It should be noted that the EU Council is proposing to defer the application of the new provisions for 1 year, to 1 January 2023. (Original version in French by Marion Fontana)