From January 1st, 2023, chapter 24 of the Tax Information Exchange Act entered into force, according to which platform operators must provide information about the sellers and service providers using the platform and the income earned by them to the Tax and Customs Board.
Platform operators must collect the information by the end of December each year and report it to the tax authorities by the end of January. I.e., the data for 2023 must be submitted by January 31, 2024. Tax authorities will exchange information with each other in February.
A digital platform is an application or a website (e.g., Airbnb, Amazon, Bolt, Uber, Booking, Etsy, etc.) that allows sellers to connect with the customers in order to:
- sell goods (material goods)
- rent or lease real property (e.g., accommodation, parking spaces, business premises)
- provide services (e.g., babysitting, courier services, online language courses, etc.)
- rent a means of transport.
A platform operator is the company that ensures the operation of the platform and decides on granting access to the platform.
The seller is a natural or a legal person or a person with no legal status, who is registered on the platform, performs reportable activities (see the list above) and receives payment for it. The seller should be a resident of a member state of the European Union or renting out a property located in a member state.
As an exception, the platform operator does not have the obligation to provide information about a seller who has concluded less than 30 transactions for the sale of goods through the platform in a calendar year and the total amount of the fee paid to him does not exceed 2,000 euros. Also, hotels, motels and other accommodation businesses who provided more than 2,000 rental or rental services in connection with the property or properties located at the same address and owned by the same owner, are excluded from the reporting.
The reportable information about sellers and service providers includes, among others, personal data (name, address, personal identification number/registration code) as well as payment account number, the total amount of fees paid to the seller, the number of sales/services provided, as well as service fees, brokerage fees or taxes withheld or collected by the platform operator. In case of real estate rental, the address of the real estate, the number of the real estate, and the number of days it was rented or leased in the calendar year must be provided.
In case of non-fulfilment of the reporting obligation, the tax authority may impose a non-compliance levy up to 3,300 euros on the platform operator. The tax authority may also have a warning displayed for the users on the platform that the platform operator has not provided information within the additional deadline set by the tax authority. In addition, the tax authority has an option to request the electronic communication service provider to restrict access to the platform and block the domain name.
Based on tax authority’s assessment, it is likely that merely 1/5 of income is declared by the sellers using the platforms. Tax authority can use the reported data for risk analysis and to assess the necessity for supervision, and in theory for filling in personal income tax returns.
The platform operator’s reporting obligation or non-reporting does not exempt sellers from their income declaration or tax obligations. If the fee is received by a sole proprietor (FIE), entrepreneur account holder or a company, the income is taxed according to the business form. However, the platform operator is obliged to withhold and pay labor taxes from the service fees paid to a natural person (not a sole proprietor or the entrepreneur account holder). There is also an obligation to withhold income tax from the rent paid to a natural person. You can read more about the taxation of income earned through the platform on the website of the tax authority.