EU Directive DAC7 in Slovak legislation
We provide you an overview of the new reporting obligations for digital platform operators arising from the EU Directive DAC7. The information should help tax authorities to ensure fair taxation of income in digital area.
The Slovak Parliament approved on 15 June 2022 an Amendment to the Act No. 442/2012 on international cooperation in tax administration as amended which incorporates the EU Directive 2021/514 from 22 March 2021 amending the Directive 2011/16/EU on administrative cooperation in taxes. The Amendment which introduces new obligations for operators of digital platforms and provisions concerning joint tax audits takes effect on 1 January 2023 except for provisions to joint tax audits which will be effective from 1 January 2024.
Joint tax audits will be tax audits performed by the tax authorities of two or more EU member states. The Amendment defines the rights and obligations of the tax authorities from the other country. It also stipulates that the joint tax audit starts on the day stated in the announcement on the joint tax audit and ends on the day of the elaboration of the final report. Unlike in the case of usual tax audits, there is no deadline for finalizing the joint tax audits. The Slovak Tax Authorities can use findings from the final report from the joint tax audits for local tax administration and for purposes of proceedings related to double taxation avoidance.
The Amendment also introduced notification obligations for operators of digital platforms. It defines the digital platform, its operators and other terms related to the notification obligations of operators of digital platforms. For example, it stipulates that sellers using the digital platforms are excluded from the notification obligation if they are governmental entities, entities the shares of which are regularly traded on a stock exchange, hotels and other persons letting out real estate if the number of transactions exceeded 2 000 in the period subject to notification, and persons for who the operator of the digital platform mediated less than 30 sales of goods in total not exceeding EUR 2 000.
The notification obligation must be fulfilled by 31 January of the year following the year in which the seller was identified as a seller subject to notification. If a different platform operator already notified the Slovak Tax Authorities on the same seller, it will be sufficient to only electronically submit an announcement that a different digital platform operator already met the notification obligation. The respective templates will be published on the website of the Financial Authorities.
The digital platform operator must within 15 days of becoming an operator of a digital platform or from any changes of information already filed notify the Slovak Tax Authorities in which country he will be filing the notifications on the sellers. If Slovakia will be selected by a foreign operator, the foreign operator has 15 days from the commencement of his activities to register with the Slovak Tax Authorities.
The operator must by 31 December of the respective period subject to notification perform a due diligence of the information on sellers and their transactions to be notified to the tax authorities. For sellers registered on the platform prior to 1 January 2023 the due diligence procedures must be performed by 31 December 2024. The digital platform operators must archive the underlying information for 10 years from the end of the year in which the notification on sellers had to be filed.
The Amendment contains also provisions concerning the protection of personal data and procedure in the case of breach of this protection, as well as due diligence procedures for the digital platform operators and information which must be notified to the tax authorities and exchange of information.
Sanctions for non-compliance with the notification or registration obligations amount from EUR 3 000 to EUR 10 000 and can be imposed also repeatedly.
You can find more information on the new rules in our previous article.