Key takeaways
Background
On 16 May 2023, the Luxembourg Parliament adopted a law implementing DAC7. As a reminder DAC 7 extends the EU tax transparency rules to digital “platforms” and introduces an obligation on “reporting platform operators” to assess, verify and report specific information with respect to “reportable sellers” that have undertaken “relevant activities” through their platforms. To this effect please refer to our previously published article on DAC 7 Law for further insights.
Following the enactment of the DAC 7 Law, the Luxembourg Tax administration (“LTA”) issued the FAQ with the aim to provide additional information on the due diligence process and the submission requirements to be met by the digital platform operators within the meaning of DAC7 (the “Operators”).
In Scope-Entities
The DAC 7 Law applies to digital platform Operators, defined as entities having a contractual relationship with sellers and making all or part of a platform available to them.
The activities falling within the scope of the DAC 7 Law encompass the rental of immovable property, the personal services, the sale of goods and the rental of any mode of transport, carried out through platforms.
The DAC 7 Law and the FAQ define a Reporting Operator as any Operator that is resident in Luxembourg for tax purposes or, in the absence of tax residence in the EU, (i) has been incorporated in accordance with the laws of Luxembourg, (ii) has its place of management in Luxembourg or (iii) has a permanent establishment in Luxembourg.
Key filing deadlines
In general, an Operator must complete the due diligence procedures by 31 December of each calendar year of its operations. For the first reporting period, however, an extension applies until 31 December 2024. This applies with respect to sellers which were already registered on the platform on 1 January 2023, or on the date when an entity first qualifies as a reporting Operator.
An Operator must report for each calendar year by 31 January of the following year. However, the actual deadline for reporting is determined by the date when the Operator recognises a seller as a reportable seller. As soon as a registered seller is recognised as a reportable seller, it must be reported in the following year by the platform operator together with all supporting information. However, when an extension applies for completing the due diligence procedures by the end of the second reporting period, the information about the sellers falling within the scope for the extension, must be reported by 31 January of the year following the second reporting period.
Notification
An Operator which opts to fulfil its filing DAC 7 obligation in another Member State, shall have notified the LTA by 31 December 2023. When the Operator initiates reportable activities after 31 December 2023, the latter must notify his/her choice of “reporting Member State” no later than the date on which the Operator has initiated his/her reportable activities.
The registered Operator must notify the LTA of any change to the information provided at the time of its initial registration no later than one month after the change is made.
Where the Operator no longer carries out any activity as an Operator, it shall notify the LTA within one month as from the end of his/her reportable activity.
Automatic exchange of information
Information pertaining to reportable sellers is exchanged with another Member State within two months of the end of the reporting period to which the reporting obligations relate. The first exchange shall take place on 29 February 2024 for the period running from 1 January 2023 to 31 December 2023.
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