Thus, in 2011, Directive 2011/16/EU on administrative cooperation and exchange of information in the field of taxation was adopted. This Directive has been amended over the years to meet the ongoing tax requirements and to improve the means that tax authorities can use in their fight against aggressive tax planning.
The latest measures in this category have been implemented through Directive 2021/514/EU (known as DAC7), which establishes reporting obligations for digital platform operators.
In recent years, the digitisation of the economy has advanced at a rapid speed, and the cross-border services offered through digital platforms have led to complex situations resulting in the avoidance of tax obligations, as well as fraud and tax evasion. Thus, the need to adopt standardized regulations within the internal market has appeared, to correctly evaluate and control the revenues obtained as a result of the commercial activities carried out through digital platforms.
The rules imposed by DAC7 establish reporting obligations for the operators of digital platforms concerning the sales intermediated on these platforms.
„The main purpose is for the tax authorities within the Member States to check how the revenues obtained by individuals or legal entities from the sales performed through the platforms were declared and taxed.”, mentioned Liviu Gheorghiu, Tax Director, Mazars in Romania.
Currently, DAC7 has been transposed into domestic legislation through Government Ordinance no. 16/2023, with Romania being among the first states in the EU to transpose DAC7 regulations, along with Austria, Denmark, France, Hungary, Croatia, and Belgium.
The activities subject to reporting must be carried out in exchange for a consideration
The activities covered by DAC7 are the rental of real estate, both commercial and residential, the provision of personal services, the sale of goods, and the rental of means of transport. To be considered reportable, the transactions must be intermediated through a digital platform where the seller and buyer are connected. Thus, the reporting obligation concerns the operators of marketplace platforms.
For such an activity to be considered reportable, it must be performed in exchange for a consideration (paid or credited) and the value to be known by the operator of the digital platform.
„The platform operator has the obligation to collect and verify certain information regarding the activities carried out by the sellers on the respective platforms. Moreover, the operators of digital platforms must establish whether the collected information is correct, by using all the information and documents it has in its internal records, as well as any electronic interface made available free of charge by a member state or by the EU.”, mentioned Alina Ghiță, Tax Manager, Mazars in Romania.
The first reporting deadline is 31 January 2024.
The operator of the digital platform must report to the tax authorities the name of the seller, address, tax identification number, VAT code or registration number within the Trade Register, the financial account, information regarding the total consideration paid or credited, and any fees charged by the platform operator, as well as the identification data of the platform operator.
Reporting is due annually, by 31 January, for the previous year. Thus, the first reporting deadline is 31 January 2024.
The operators of digital platforms can be fined up to RON 100,000
Regarding the sanctions imposed, the DAC7 Directive states that they must be "effective, proportionate, and dissuasive". The concrete implementation of such sanctions is decided by each EU member state. In Romania, for the non-fulfillment of reporting obligations, penalties between RON 20,000 and RON 100,000 may be imposed.
Additionally, in case a seller does not provide the information requested by the digital platforms, his account may be closed or the revenues obtained from the sales on the respective platforms may be withheld.
Through the exchange of information between the Member States, the transparency regarding reportable transactions will increase and the competent authorities will be able to take effective measures for the taxation of non-declared revenues. Furthermore, the exchange of information between Member States will facilitate the transfer of knowledge between national tax authorities and lead to the consolidation of more efficient tax systems and to the reduction of the risk of avoiding tax obligations, as well as the simplification of risk analyses that tax authorities perform on taxpayers, with the final goal of carrying out targeted fiscal audits.
In conclusion, the operators of digital platforms must assess their capabilities for collecting the necessary information and analyse the transactions that could fall within the reportable category.
„In this regard, the first challenge is the amendment of the contractual framework by including specific clauses for ensuring the collection and analysis of the necessary information, the notification of business partners in this regard, as well as the updating of IT systems and the internal procedures to allow the collection of information and monitoring of revenues.”, mentioned Alexandra Nechita, Tax Assistant Manager, Mazars in Romania.
At the same time, sellers using digital platforms need to analyse the declaration and related taxation for the revenues obtained within the last period.