DAC 7: online platforms, key players-to-be in the European tax transparency framework?


On 15 July 2020, the European Commission adopted a new tax package to support economic recovery and long-term growth within the European Union (“EU”). Furthering EU tax policy, the package builds on the concepts of tax fairness, simplicity and transparency.

This package relies on three components, one of which is a legislative proposal to amend Directive 2011/16/EU on administrative cooperation in the field of taxation, with a view to extending to digital platforms the existing rules on tax transparency[1] (proposal for a Directive COM(2020) 314 final (2020/0148 (CNS)) or "DAC 7").

The proposal imposes on platform operators an obligation to collect and verify information relating to persons selling through their intermediary, so as to report the information collected to the Member States, which will in turn be able to exchange it with the other Member States concerned. It is based on an impact assessment which underlines the characteristics of the digital platform economy that "make the traceability and detection of taxable events by tax authorities very difficult".

DAC 7 objective is two-fold: (i) introducing a mandatory automatic exchange of information between competent tax authorities to enable them to collect adequate tax revenues and (ii) harmonizing the legal framework for platform operators reporting obligations to avoid high compliance costs arising from disparate national legislations. To date, twelve Member States, including France, have already adopted domestic measures imposing reporting obligations to online platforms.

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[1] The proposed Directive also aims at strengthening the exchange of information between Member States by clarifying the notions of "foreseeable relevance" and "group requests", and by introducing the notion of "joint audits" within the scope of DAC.