EU DAC 7 – digital marketplace VAT reporting 2023
- Mar 24, 2021 | Richard Asquith
The European Council has approved new rules on data sharing between member states' tax authorities of VAT transaction data provided by online digital platforms. The new measures, ‘DAC 7’ will come into effect from 1 January 2023.
The new process is targeting cross-border sales of goods and services which are prone to misdeclaration of VAT, particularly when online digital platforms or marketplaces facilitate the transactions across several countries.
Seventh amendment to Directive on Administration Cooperation (DAC 7)
DAC 7 provides for the automatic exchange between member states of seller transaction data to help identify VAT errors or fraud. This covers transaction income and related VAT data provided by digital marketplace operators on their third-party merchants. DAC 7 includes both EU and non-EU platforms operating with EU consumers. It brings the benefit of reducing the tax authorities’ numerous overlapping and inconsistent requests for data from the digital marketplaces. It also includes scope for tax authorities to collaborate on joint audits.
The original DAC lays down the rules and procedures for the exchange of electronic data between member states to facilitate compliance with domestic laws.
Member states existing VAT reporting obligations
Several of the European Union 27 member states already oblige marketplaces to provide them with data on their sellers transactions. These include: Austria; Belgium; Bulgaria; Denmark (services); Italy; Germany; Finland; France; and Greece.