There is a growing amount of buzz around DAC7, and how it will expand the EU-wide Tax Authority cooperation, while also helping member states address the challenges of the ever-increasing digital economy.
But this is not without some drawbacks for business owners, since there's a lot of burden on certain platforms within the scope of DAC7. With the implementation of DAC7 a few months away, we have put together some actionable tips to help business owners get ready.
By the end of this article, you'll learn more about what obligations you have following the implementation of DAC7 and how your platform can get ready.
Here are five key actions you can take now:
1. Consider If You're Affected
First, you need to understand and examine the activities of your platforms and their users to know if you're affected. A quick way to find out is to determine if your platform facilitates Relevant Activities, such as:
- Rental of immovable property
- Personal services
- Sales of goods
- Rental of any mode of transport
It's important to examine all aspects of your business to know whether it provides reportable services within the scope of DAC7. One easy way to find out is by taking our DAC7 Test.
2. Run A Data Gap Analysis
When your platform is within the scope of DAC7, your next step should be running a gap analysis to determine what data you collect today and what data are missing par DAC7 requirements.
Also, the data collection and storage process must be evaluated from an operation, legal, and privacy perspective. Therefore, how you handle seller's data is as crucial as complying with the DAC7 directive.
After running a GAP analysis, you need to engage your team or internal stakeholders, including teams as diverse as legal, commercial, data privacy, and engineering. Collaborating with the right internal players to get ready for DAC7, is key to success.
That way, you can start early in your preparation without risking sanctions. In other words, the more you know about DAC7 and its purpose, the better your platform can adapt.
4. Create A Project Plan
The new directive requires your platform to collect massive amounts of sensitive data to be reported to the relevant tax authorities. In that case, you have to develop a reliable process of collection and review of data to prevent a data breach.
It’s best if you work closely with your team to develop a project plan that aids better data management. Also, consider some of the lessons of GDPR and let them guide you toward staying compliant with DAC7.
5. Stay In The Loop
As DAC7 fast approaches, the best you can do is to stay engaged by paying attention to your local tax authorities as guidance and regulations are developed.
While DAC7 might incur another administrative load, your mindset regarding this new development will help you scale through. For instance, it's promised to foster tax transparency in a digitized economy, thereby eliminating double taxation and tax evasion.
We've got more resources you'll find helpful as you get ready for DAC7. So feel free to check them out, and don't forget to subscribe to stay in the loop :)