In mid-November the president signed the amendment to Act No. 164/2013 Coll., on International Cooperation in Tax Administration, implementing the Council Directive (EU) on administrative cooperation in the field of taxation, i.e., the DAC 7 Directive, which introduces a new scope of the automatic exchange of information, effective from 1.1.2023.
The new obligation concerns the operators of digital platforms with the goal of obtaining information about sellers that are active on such platforms. In other words, the operators of platforms will be obliged to announce income that sellers realise through them. The announced activities are understood to be:
- the provision of real estate;
- the provision of means of transportation;
- a personal service (the work of a natural person); or
- the sale of goods (goods is understood to mean material items and animals).
The DAC 7 Directive does not apply to cases where the platform itself performs these activities, i.e., e-shops through which the platform operator offers goods itself. So called “excluded” platform operators also do not have a reporting obligation. These are platform operators that demonstrate to the tax administrator upfront that they do not have reportable sellers, i.e., that they have either only sellers without a reporting obligation and/or “excluded” sellers, which are public-owned sellers, sellers listed on the stock exchange, providers of accommodation on a large scale and sellers of goods on a small scale, by which less than 30 reportable activities were facilitated through the platform and in this connection obtained at most EUR 2000. Moreover, the reporting obligation can also concerns platforms through which goods can be purchased from multiple sellers, including price comparison portals with the integrate option to directly buy the goods, or auction portals.
A Czech or Czech Republic-based non-established reporting platform operator shall submit to the tax administrator a notification of the reported activity performed by the seller. A Czech reporting platform operator, however, will not have this obligation if, in relation to this platform, another platform operator established in that state or platform operator facilitating cross-border activity in that state has submitted a notification in a Member State of the European Union containing the same data, nor will a Czech reporting platform operator that is also established in another Member State has this obligation, if it has notified the tax administrator that it is fulfilling the reporting obligation in another member state.
The reporting period is understood to be the calendar year. The reporting shall be made to a Specialised Financial Office once a year, always by the end of January for the preceding calendar year. The deadline for the submission of the first notification is 31 January 2024 for the first reporting period of 2023.
From 1.1.2023, Czech platform operators are obliged to report to the reporting obligation no later than 15 days from the date on which they became Czech reporting platform operators. All submissions can be made electronically via the MOJE daně portal.
The tax administrator may impose a fine on the reporting platform operator for non-compliance with obligations of a non-monetary nature, or an administrative fine if it breaches the reporting obligation, up to a maximum of CZK 1.500.000.
In addition to the details of the reported seller, the reporting shall include, for example:
- an indication of the commission, tax, fee, other similar cash transactions or other amount or value of non-cash transactions which are withheld or charged by the reporting platform operator for each quarter;
- the total consideration (payment) received by the seller and the number of reported activities carried out in the given quarter;
- the address of each property offered and, where available, the information enabling the identification of the real estate in the land registry or in a similar foreign registration if the property is located in another Member State;
- the number of days for which each offered property is leased during the reported period and the type of each offered property, if the reporting platform operator has such data available, etc.
The data collection starts on 1.1.2023 and the first report is submitted in January 2024. In addition to the fine for the breach of the reporting obligation, platform operators are also at risk of being included in the list of non-cooperating platforms, which may entail the risk of major inspections by the tax office and other reputational risks. Therefore, both platform operators and sellers themselves should be prepared well in advance for this new obligation, in particular with regard to the setting up of accounting systems used to analyse the reporting obligation and to collect the necessary data.
If you have any questions, please do not hesitate to contact our experts.
Author: Pavla Vítková, Tax Manager