As expected, the EU Council on March 22 approved DAC 7, establishing new EU-wide rules that require digital platforms to report the income earned by sellers on their platforms to EU tax authorities. The new rules also extend the scope of automatic exchange of information among EU tax officials to the information reported by the digital platform operators so that this data is shared with EU tax authorities that need it.
The new rules also specify a framework for the competent authorities of two or more Member States to conduct joint audits, a growing trend worldwide. The new joint audit framework will become operational in all member states from 2024 at the latest.
Further, adjustments were made to automatic exchange of information concepts of “foreseeable relevance of information” and to provisions on requests for information for a group of taxpayers.
The new rules on digital platforms will cover platforms located both inside and outside the EU from January 1, 2023. The aim is to ensure that income earned by individuals and businesses that use digital platforms to sell goods and services does not escape taxation.
“This is an important update of the EU rules, which will help to ensure that sellers who are active on digital platforms also pay their fair share of tax. It is particularly welcome at a time when more and more sales are made online and the COVID-19 pandemic is putting pressure on public finances. By extending its automatic exchange of information rules to the digital platform economy, the EU is setting an example to the world,” said João Leão, Portugal’s Minister for Finance. Portugal currently holds the EU Council presidency.
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