In a Chamber beef outgoing Secretary of State for Rij seeks to allay concerns raised in society about the information obligation of platforms (DAC7).
DAC7
With effect from 1 January 2023, the seventh amendment to the Directive on administrative cooperation (DAC7) came into force. Under DAC7, digital platforms must provide information about their users to the tax authorities. And the information collected within the EU under this framework is exchanged between tax authorities in EU member states.
The Secretary of State stressed that DAC7 did not create any new tax obligations. No tax laws have been changed as a result of DAC7. The aim behind DAC is to promote the fight against tax avoidance and evasion, proper taxation and tax morality.
The activities, of users of the digital platforms, to be reported include: rental of real estate, personal services, sale of goods and rental of means of transport.
Pre-completed declaration
The information received from the DAC7 report by digital platforms on 2023 by the Tax Administration is not (yet?) part of the pre-completed return. The Tax Authority is going to process, analyse, assess and test the information received in the coming period how this data can be used as counter information in the context of monitoring and enforcement of tax laws.
The State Secretary stressed that the Tax Authority only shares the information with other government departments when there is a legal basis for doing so. Currently, there are no such bases (yet?).
Big and small
DAC7's reporting requirement does not apply to large and small entrepreneurs.
Large are listed or related companies. Property landlords, which carry out more than 2,000 rental activities (transactions), are also not required to report. Such large companies are already sufficiently visible to the tax authorities given their size.
The threshold for small sellers is 30 transactions AND for a total of no more than €2,000 per calendar year. This threshold applies to the reporting requirement, but does not automatically mean that the seller cannot be taxable for these activities.
Source of income?
A source of income exists, the State Secretary said, if the aim is to benefit from the sale of the products or services and the expectation that this benefit will be achieved is real. If the costs are expected to exceed the remuneration, there is no source of income. To illustrate, the State Secretary gives the following example: “Selling used clothes through a platform earns a certain amount of money. As a rule, the cost of buying the new clothes is higher than the sale proceeds of the used clothes. In such a case, there is no source of income and no income tax has to be paid on this income.”. However, when a person structurally sells clothes at a higher price than the price he pays for them, it does constitute a source of income and income tax must be paid.
What matters for VAT is not whether profits are made. For someone who regularly performs sales activities, entrepreneurship for VAT quickly comes into the picture. In this context, the State Secretary points to the registration threshold which is at an annual turnover of €1,800 (with effect from 2025: €2,200).