The new law implementing the DAC7 Directive

In February 2024, a new bill amending the law on the exchange of tax information with other countries and certain other laws was published on the website of the Government Legislation Centre (RCL). The aim of this bill is to implement Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (Official Journal of the European Union L 104/1 dated 25.03.2021), commonly known as the DAC7 Directive.

According to the EU regulations, digital platform operators will be burdened with new reporting obligations. This constitutes another step towards tightening the tax system in the European Union. The new regulations aim to reduce the number of unreported business activities conducted by sellers and service providers operating in the online sphere.

What is the DAC7 Directive?

DAC7, adopted by the European Union in 2021, is a directive imposing on Member States the obligation to introduce provisions expanding the scope of information that digital platforms are required to report to state authorities.

The main goal of the European Council is to tighten and standardize national tax systems and to combat the exploitation of legal loopholes by taxpayers. The new regulations primarily aim to facilitate the effective identification of individuals who conduct large-scale sales of goods or provide services without being registered for tax purposes.

Who will be affected by the DAC7 Directive?

The provisions of the DAC7 directive are primarily addressed to digital platform operators who enable sellers to use their interfaces to reach customers and make sales of goods and specified services. The new reporting obligations apply exclusively to platform operators facilitating sellers in activities such as property rental, personally provided services, sale of goods, and provision of transportation.

It is worth noting that the reporting obligation will not apply to sellers who, during the reporting period (typically 12 calendar months), have conducted less than 30 transactions of sales of goods or whose remuneration paid or recognized during this period did not exceed 2000 euros. Additionally, government entities, publicly listed entities, and hotel operators who have conducted over 2,000 rental transactions within a year (within a specified group of properties) will also be exempted from reporting requirements.

In practice, the DAC7 regulations will also indirectly affect sellers using digital platform services, who will also need to comply with the new requirements. The new provisions will require sellers to provide relevant information to platform operators.

Obligations arising from the DAC7 Directive

According to the published law, digital platform operators will be required to:

provide information about sellers to the Head of the National Tax Administration,
comply with specified due diligence procedures, including checking the status of sellers, their residency, and the reliability of the obtained information.

Information about sellers will include data such as:

name and surname
date of birth
company name
tax identification number (TIN)
VAT identification number
seller’s financial account identifier (if available for the reporting platform operator)
country of residence of the reported seller
total remuneration paid or recognized in each quarter of the reporting period and the number of relevant transactions for which this remuneration was paid or recognized
contributions, commissions, or taxes withheld or collected by the reporting platform operator in each quarter of the reporting period.

Entry into force

Initially, it was planned that the DAC7 Directive would be implemented by 1 January 2023, but not all Member States managed to prepare for its implementation on time, including Poland.

The new regulations are to come into force from 1 July 2024 onwards. However, some of the new provisions will apply to entities that, at any time between 1 January 2023 and 30 June 2024, met the conditions to be recognized as platform operators subject to reporting obligations.

Entities meeting these criteria should:

carry out due diligence procedures in relation to sellers who were registered on the platform during this period by 31st of December 2024
complete reporting procedures by 31st of January 2025.

Penalties for failure to comply with obligations

Digital platform operators who fail to fulfil the obligations imposed by the DAC7 Directive may be subject to a fine of up to 1 million PLN.

This includes, among others:

failure to provide information about sellers to the Head of the National Tax Administration unless the platform operator has issued appropriate requests and applied measures to the seller
failure to comply with due diligence principles and procedures, including failure to collect the required documentation
failure to rectify identified irregularities within the specified deadline.

Persons acting on behalf of or in the interest of the platform operator who fail to comply with DAC7 obligations may be subject to a fine of up to 180 daily rates. The maximum fine may exceed even 10 million PLN.

This includes, among others:

failure to comply with due diligence principles and procedures, including failure to collect the required documentation and failure to provide information about sellers to the Head of the National Tax Administration,
failure to register in the selected Member State
failure to rectify identified irregularities following a control within the specified deadline.

If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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