The Digital Platforms Reporting Act - an overview

The Digital Platforms Reporting Act (DPMG, DAC 7) was adopted into Austrian law with the Tax Reform Act 2022 and aims to improve the information available to the tax authorities. Globally and in Austria, an increasing number of transactions are generated through (online) platforms, but proper taxation, whether by companies or private individuals, is not always ensured. This new law aims to remedy this – it comes into force on 1 January 2023 and requires information for the reporting period 2023 to be submitted to the Austrian tax authorities by 31 January 2024.

The reason for DAC 7 is, unsurprisingly, globalization and digitalization of the economy and the associated information problems for financial administrations. Specifically, this means that although domestic points of contact may exist for tax purposes (such as real estate located in Austria), the business operations are carried out via a digital platform abroad, and thus access to and taxation of the provider operating through the platform is usually only possible to a limited extent. A remedy and greater transparency are provided by requiring platform operators in Austria to report information about sellers/tenants, etc., and by also requiring that Austria receive corresponding information from platform operators located in the EU or in certain third countries.

The reporting obligation under DAC 7 applies to platform operators whose platforms enable relevant activities to be offered and carried out by providers. The activities include the following categories:

Activities in which the provider provides real estate for use or enjoyment for a fee

This refers to the (economic) rental and leasing of immovable property regardless of a civil law tenancy agreement; by immovable property is meant any immovable asset, including residential and commercial properties as well as parking spaces. Neither the duration nor the type or use of the rented or leased immovable property matters in this context.

Provision of a personal service for remuneration

A personal service is a service that involves time-limited or task-related work performed by one or more natural persons (who act independently or on behalf of the legal entity). The service itself can be performed online or offline – examples include ride-sharing, cleaning services, food delivery, craft activities, and educational activities offered through platforms. This also includes longer-lasting services such as seasonal activities.

Sale of goods for payment

It is important when selling goods via the common online platforms that sales of non-physical goods, such as digital content (such as special accessories that can be used in online games), cryptocurrencies, or NTFs (Non-Fungible-Tokens), are not included in this category and therefore do not fall under the DPMG.

Renting of vehicles for a fee

This includes land vehicles (e.g., agricultural vehicles, bicycles, and electric scooters), as well as air and water vehicles that serve to transport people or goods – the motorization is not the point.

The platform’s definition is also significant for the reporting requirement; it is very broad and basically covers any type of software that allows for direct or indirect interaction within the meaning of the activities. Software includes websites and also mobile applications. Important parameters here are that the contract is concluded electronically via the platform and that the payment processing must also take place directly or at least indirectly via the platform. Therefore, traditional online stores from companies are exempt from the reporting requirement.

Platform operators required to report information in Austria must electronically report a wide range of information to the Austrian tax authorities annually (by no later than 31 January of a calendar year for the previous calendar year). An exemption from the reporting obligation is possible under certain conditions and, in principle, aims to avoid double reporting. For example, when there are several platform operators for a platform or when a platform operator has multiple direct points of contact in several Member States.

Prior to the reporting of the data, the platform operators must collect the following information for each seller who is a natural person:

• Name,
• Main address,
• Tax identification number, if not available: Place of birth,
• If applicable, value-added tax identification number,
• Date of birth.

If the sellers on the platform are legal entities, the following data are also important:

• Company name,
• Trade register number,
• if applicable, information about the existence of an establishment in the EU where relevant activities are carried out.

In the case of the rental of immovable property, the following must also be collected:

• Address of each listed real estate unit,
• if applicable, the number of the land registry entry,
• Documents, data or information to prove that the immovable property is owned by the seller.

In the event of a report, in addition to information about the platform operator itself, the platform operator must also provide further information about each seller required to report. Essentially, it is important to include the total amount of fees or credits per quarter and the number of relevant activities performed (to the extent that these are known or should reasonably be known to the platform operator). Equally important are the fees, commissions, or taxes that were collected or calculated by the platform operator per quarter. If immovable property is rented out, in addition to the address and land registry entry, the number of days each advertised real estate unit was rented out for and the type of advertised real estate unit (if available) are also important.

The reported data are exchanged within the competent authorities of the EU member states so that the country of residence of the reported seller is informed and can be taxed accordingly. In cases where the rental of immovable property is exercised, the country of registration of the property is also occasionally informed if it differs from the country of residence.

Finally, the DPMG also provides for fines, which are intended primarily to prevent violations of the registration requirement (by third-party platform operators) and the reporting requirement – a report is not submitted, not fully submitted, or not submitted within the deadline, or incorrect information is reported. The registration requirement for the platform operator arises anew each year so that platform operators cannot "buy off" their registration requirement by taking on the (one-time) fine for violating the registration requirement and subsequently operating without registration. In the case of intent, the fine amounts to a maximum of €200,000, and in the case of gross negligence, to a maximum of €100,000. Self-disclosure is excluded as a mitigating factor.

Image: © Adobe Stock - Andrey Popov