Fair Taxation: Member States agree on new tax transparency rules on digital platforms

This article is brought to you in association with the European Commission.

The European Commission welcomes the recent compromise reached by Member States to extend EU tax transparency rules to digital platforms, making sure that those who make money through the sale of goods or services on platforms also pay their fair share of tax. This follows the proposal made by the Commission in July as part of the Action Plan for Fair and Simple Taxation Supporting the Recovery. The agreed proposal on administrative cooperation (DAC 7) will ensure that Member States automatically exchange information on the revenues generated by sellers on digital platforms, whether the platform is located in the EU or not. This will not only allow national authorities to identify situations where tax should be paid, but will also reduce the administrative burden placed on platforms, who often have to deal with several, different national reporting requirements. The proposal also strengthens and clarifies the rules in other areas in which Member States work together to fight tax abuse, for example through joint tax audits.

Paolo Gentiloni, Commissioner for the Economy, said: “It was high time we updated our tax rules to reflect the growing importance of digital platforms for the European economy. Once the new rules discussed today are adopted and implemented, national authorities will automatically exchange information on the revenues generated by sellers on these platforms, and those sellers will benefit from simpler administrative procedures. This is good news for the public purse and good news for honest entrepreneurs.”

Formal adoption will follow once the European Parliament and the Economic and Social Committee give their opinion. The new rules will apply as from 1 January 2023 onwards.

Background

Since its adoption, the original Directive 2011/16/EU has been amended six times, to include information on financial accounts, on tax rulings and advance pricing agreements, on country-by-country reports, on beneficial ownership, on reportable cross border arrangements and now on digital platforms. Last week, the Commission published a roadmap to extend the scope of the Directive to include crypto-assets and e-money (DAC8).