New tax obligations for platform operators as Spain transposes DAC7

Introduction

Currently, the use of online platforms for cross-border provision of services and sales of goods is increasing. This leads to a whole new environment where it can be difficult to enforce tax rules.

In order to tackle this situation and improve the exchange of information and administration cooperation in the EU, DAC7 introduced due diligence procedures and reporting obligations for digital platform operators, as well as an automatic exchange of information between EU Member States regarding certain activities carried out through digital platforms.

The Spanish Parliament has approved Law 13/2023, of 24 May, on the amendment of the Spanish General Tax Law pursuant to the transposition of DAC7 (“Law 13/2023”), which includes the measures to require platform operators (e.g. marketplaces) to carry out due diligence procedures, fulfil reporting requirements and registration requirements for non-EU platform operators: Law 13/2023 also introduces a sanctioning regime derived from the lack of compliance of the abovementioned obligations.

Law 13/2023, whose Regulations developing the mentioned obligations is currently being subject to public consultation, was published in the Spanish Official Gazette on 25 May 2023, and has come into force with effects as of 26 May 2023. However, pursuant to the draft bill (Proyecto de Real Decreto) developing Law 13/2023, the reporting obligations for platform operators will in principle come into force in 2024 with reference to the information corresponding to 2023.

Reporting platform operators

Entities deemed as “Reporting Platform Operators” as defined in Section I of Annex V of DAC7, as well as in the Multilateral Competent Authority Agreement on Automatic Exchange of Information on Income Derived through Digital Platforms and the Model Rules for Reporting by Platform Operators are obliged to carry out the due diligence procedures and fulfil the reporting requirements laid down therein (see below).

Therefore, we note that not only digital platforms tax resident in the EU are affected by these rules, but also entities not resident for tax purposes in the EU that facilitate the carrying out of relevant activities by reportable sellers or involving the rental of immovable property located in the EU.

Reportable transactions

Pursuant to DAC7, operators of digital platforms are required to collect information of reportable sellers related to the following activities: (a) the rental of immovable property, including both residential and commercial property, as well as any other immovable property and parking spaces; (b) personal services; (c) the sale of goods; and (d) the rental of any mode of transport.

We note that DAC7 excludes certain sellers from the reporting obligations, such as governmental entities, listed companies and sellers for which the platform operator facilitates more than 2,000 rentals in respect of a given property during a reporting period (i.e. hotel chains, large tour operators, etc.).

Obligations under DAC7

Platform operators are obliged to carry out due diligence procedures and fulfil reporting and, in the case of non-EU platform operators, registration requirements. Subject to the final approval of the draft bill developing Law 13/2023 in Spain, the main obligations are:

• Due diligence procedures: Platform operators must apply certain procedures, which include (i) identification of the seller subject to review, (ii) collection of the seller’s information, (iii) verification of the seller’s information, (iv) determination of the Member State of residence of the seller, and (v) collection of information on rented immovable property.

• Reporting requirements: Platform operators must report to the relevant tax authorities of the State of residence or registration (i) information collected from reportable sellers who carried out reportable transactions, (ii) the bank account to which the consideration is paid, (iii) Member State of residence of the seller, (iv) the total consideration paid, (v) any fees, commissions or taxes and (vi) in respect of the rental of immovable property, also the address and cadastral number of the property and the number of days rented.

• The reporting obligations must be fulfilled no later than 31 January of the period following the year that a seller is identified as reportable.

• Registration obligations: Non-EU platform operators that shall complete the due diligence procedures and the reporting obligations must be registered and reported (only) in one EU Member State.

• Recordkeeping: Platform operators must collect and keep records of the information from reportable sellers gathered in the due diligence procedures and have the information available upon request of the Spanish Tax Authorities (“STA”) for 10 years.

• Data Protection: Platform operators must inform the individual reportable sellers that the information facilitated to them will be reported to the STA and transferred to the seller’s Member State of residence. Also, individual sellers must be kept informed about their data protections rights.

• Sellers’ obligations: Reportable sellers are obliged to facilitate platform operators the relevant information for the latter to comply with their due diligence procedures and reporting requirements.

Sanctioning regime

Law 13/2023 lays down the rules on penalties applicable to the infringements of the obligations adopted pursuant to DAC7 (i.e., lack of registration in the EU by foreign platforms, lack of fulfilment of the due diligence procedures and reporting obligations by platform operators, and sellers’ failure to facilitate the platform operators the relevant information).

Joint tax audits

Finally, DAC7 enables joint tax audits to be carried out by two or more EU Member States. Law 13/2023 amends the Spanish General Tax Law and defines joint tax audits and describes the relevant procedure applicable as of 1 January 2024.

Regulations developing Law 13/2023

On 9 June 2023 was published for public hearing and information procedures the draft bill (Proyecto de Real Decreto) regarding the Regulations developing Law 13/2023, before being formally introduced to the Spanish Parliament.

In this regard, the draft bill further details the due diligence procedures, the reporting obligations and the registration requirements of platform operators which were introduced by Law 13/2023, and introduces in the Spanish legislation the relevant definitions established in DAC7.

Next steps

Spanish and foreign platform operators need to analyse the impact of the approval of Law 13/2023, which transposes DAC7, and be ready to fulfil the different obligations derived from it.

Hogan Lovells can provide practical guidance and assistance on the impact of this amendment. Please contact us for more information on how we can help.

Authored by Alejandro Moscoso del Prado and Alexis Panizo.