You may have heard of DAC7, but not really taken the time to read up on what it actually means for you and your business – if it affects you at all. Here you will be able to get insights into what DAC7 is, take a test if it applies to your digital platform, and read about how it may affect you.
DAC7 is a directive on cooperation between different EU member states on gathering and reporting data about natural and legal entities and their earnings through digital platforms and marketplaces. Consequently, certain digital platforms will be responsible for collecting, verifying, updating, and reporting data about the sellers in the platform and their earnings. Digital platforms have to start collecting data from the 1st of January 2023.
Furthermore, the digital platform has to submit its first report by the 31st of January 2024. Bear in mind that different EU countries may implement the Directive slightly differently. However, this should serve as a general guideline for the minimum requirements.
If you are responsible for reporting DAC7 data, there are a few things that you need to do. In brief, you need to (1.) collect data, (2.) verify data, (3.) update and manage data, and (4.) report data. These steps are described briefly below.
The digital platform shall report the data collected about the seller as well as the payments going through the platform. The digital platform is responsible to submit the reports to the competent authorities in one jurisdiction. The competent authority will then forward it EU country in which the Seller is based. The jurisdiction, in which the digital platform reports, depends on where the digital platform is located and its corporate structure. A simplified list can be found below:
The EU-member states may set their penalties for non-compliance with DAC7 independently. However, DAC7 states that the penalties should be “effective, proportionate and dissuasive”. The Member States and their competent authorities are responsible to implement DAC7 into their laws and regulations. Consequently, there may be discrepancies between the penalties in the different Member States. Furthermore, the penalties may be decided on a case-by-case basis depending on the seriousness of the offense. Furthermore, the Member States shall take coordinated action against non-EU digital platforms that are not fulfilling the requirements. This involves making it difficult or impossible for those digital platforms to operate.
Keep yourself updated with the latest news, insights and strategies about the finance side of the Creator Economy