In July 2020, the EU introduced new rules to expand tax transparency in the digital economy. This means that it will be mandatory to identify, track and report the income generated by sellers on digital platforms.
This initiative was named DAC7. Specifically, it introduces new reporting obligations that apply to digital platforms making their platform available to reportable sellers. All EU Member States must implement this DAC7 by 31 December 2022 and enter into force as of 1 January 2023.
DAC7 was created to facilitate the automatic exchange of data between Member States on sellers operating on digital platforms, regardless of whether the platform is located in the EU or not. Therefore, digital platforms are required to report to a competent authority in a specific Member State. This authority will then have to exchange the information with the competent authority in the Member State where the reporting seller is resident for tax purposes. Digital platforms not established in the EU will be required to register in a Member State in order to comply with this Directive.
Introduction in Belgium
The Belgian legislator had already introduced some reporting requirements for digital platform operators in early 2021. This is, in fact, already explicitly enshrined in law, namely in article 321quater BITC. Please note that this legislation remains in force until the EU DAC7 is transposed into national law. At that time, the current provision will no longer be in force.
In particular, Belgian and foreign operators of digital platforms through which services with a Belgian nexus (i.e. any link with Belgium) are provided by an individual will be subject to these new DAC7 light reporting requirements in Belgium. However, it is irrelevant whether the service provider acts professionally or as a private individual. Specifically, the following activities are targeted: the rental of real estate; the provision of personal services; the sale of goods; and the rental of a vehicle.
In a nutshell, this means that the reporting obligations of the platform operator under the Belgian initiative are twofold:
1. A general obligation to inform the relevant service provider about his/her tax and social security obligations (cf. information obligation of users); and
2. An obligation to provide the Belgian tax authorities with an electronic overview containing relevant information on the services in question (cf. reporting obligation) by 31 March of the year following the year for which the information is provided to users (for the first time by 31 March 2022).
List of Frequently Asked Questions
It is noticeable that these obligations were initially very vaguely defined. They have been the subject of discussion on several occasions, which has necessitated further measures and clarifications. In order to respond to this, on 14 January 2022 the Belgian tax authorities published a list of frequently asked questions.
This FAQ clarifies the legislation and provides the necessary implementing measures in view of the first reporting deadline, namely 31 March 2022. Thus, the FAQ first clarifies that the operator must provide all information regarding the tax and social security obligations to its relevant users when concluding an agreement between it and the platform. The FAQ also provides for a tolerance for non-compliance with the information obligations until 1 March 2022.
There are two specific deadlines to keep in mind:
1. First of all, by the end of February, operators of digital platforms must inform the service providers active on the platform of all tax and social obligations. Please note that this is an administrative tolerance granted by the tax authorities in the FAQ. In principle, service providers must be informed when concluding the contract with the operator of the digital platform.
2. Secondly, by the end of March, the operator of the digital platform must report certain information about the services provided via the platform to the tax authorities and service providers. This is done by means of form 281.48 and this must be prepared for each user. However, a second form has also been published (form 325.48) which must be used to meet the reporting obligation towards the Belgian tax authorities. This document must contain all the information communicated to users and must be included in form 281.48.
Finally, the platform manager, or the legal representative, will have to upload the summary declaration electronically via the BELCOTAX ON WEB application (manually or via an XML file).
Are there sanctions?
The FAQ confirms that – given the fact that no specific fine is provided for non-compliance with the DAC 7 obligations – the general fine provisions of the Income Tax Code apply. Non- compliance or late compliance with these obligations can thus give rise to an administrative fine ranging from EUR 50 for the first violation to EUR 1250 (per violation).
Taking action is the message!
This reporting obligation will undoubtedly bring changes for you. For example, if you rent out a holiday home through a digital platform, whether professional or not, that platform will be obliged to report all available data about the property in question to the competent tax authorities. The tax authorities will therefore be able to find out that you own a property and how much rent you receive from it. Filling in a correct tax return will be even more crucial from that moment on.
Given the short deadlines, we advise Belgian and foreign operators of digital platforms to take action as soon as possible and comply with the reporting obligations imposed.
Our Bofidi experts are happy to help you
Do you have specific questions about these new measures? Do not hesitate to contact us. The team of Bofidi experts will be happy to help you.