DAC 7 : Automatic Exchange Of Information For Digital Platforms Soon To Apply In Luxembourg

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Bonn & Schmitt

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The Luxembourg DAC7 bill sets forth new rules on the mandatory automatic exchange of information reported by platform operators soon to be implemented.
Luxembourg Tax
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The Luxembourg DAC7 bill sets forth new rules on the mandatory automatic exchange of information reported by platform operators soon to be implemented.

While the Directive on administrative cooperation in the field of taxation ("DAC 6") aims to enhance tax transparency through automatic exchange of information between European Union ("EU") Member States on potential "aggressive tax planning" and circumvention of Common Reporting Standards and Ultimate Beneficial Owner identification schemes, additional regulations also intend to strengthen transparency obligations in tax matters in broader areas.

In commission since 31 March 2023, the bill no. 8029 (the "Bill") would implement into domestic law Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation ("DAC 7"), with DAC 7 rules that will apply mainly as from 1st January 2023.

Main content of the Bill :

The Bill contains

  1. several sections that complement and extend the existing domestic rules on tax transparency and exchanges of information;
  2. provisions of DAC 7 that expand and help harmonize the exchanges of information between the tax authorities of different Member States;
  3. the mandatory automatic exchange of information on residents in other Member States with respect to their ownership of and income from immovable property; and
  4. new rules on the mandatory automatic exchange of information reported by platform operators.

The main proposed provisions introduce obligations for platform operators to register in Luxembourg, to collect information on income earned by sellers on their platforms and to report that information to the Luxembourg tax authorities. The Luxembourg tax authorities are obliged to automatically exchange this information with the tax authorities of the relevant EU Member State.

The first declaration will have to be filed by the operators before January 31, 2024 in respect of transactions for the year 2023, so that the tax administrations can exchange information by the end of February 2024.

Conclusion

The platforms operators will need to quickly identify their reporting obligations under DAC7 and takes the necessary measures to comply with the Bill requirements for the first reporting due in 2024.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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