Do you generate online income through digital platforms like OnlyFans, Upwork, Fiverr, Amazon, or Vinted? We have bad news for you…
Starting in January 2024, all these digital companies will be required to report all your activity to your country’s tax authorities.
As you can imagine, the new EU Directive, known as DAC7, is going to cause trouble for more than a few.
If you’ve been operating in “stealth mode” without reporting your income to the authorities, it’s time to take action!
In this article, I will explain in detail what DAC7 is and what you need to do to comply with the regulations and stay safe.
What is DAC7?
Council Directive (EU) 2021/514 (DAC7) adds to the growing list of regulations aimed at combating tax evasion.
With the exponential increase in the sale of goods and services through digital platforms, many people have opted to engage in economic activities without reporting their profits to the relevant Tax Agency.
This Directive puts an end to these practices by requiring platforms to collect and annually report their users’ data.
Which platforms are affected by DAC7?
According to the Directive, the reporting obligation falls on any website or application that allows its users to engage in commercial activities with other users.
Examples of these commercial activities include the sale of goods, the provision of personal services, the rental of real estate, or any means of transportation.
Since its origin is in the EU, this directive only affects platforms that:
- Are tax resident in the European Union.
- Offer services to users within the European Union.
Therefore, among the numerous affected platforms are:
OnlyFans, Airbnb, Upwork, Fiverr, Amazon, eBay, Uber, Patreon, Wallapop, Booking, Etsy, StockX, Vinted, among others.
The exception applies to those platforms that only facilitate payment processing, advertising, or redirect users to another platform.
DAC7 Form: Who Needs to Submit It?
Fines and Penalties
If a user does not provide their data in the DAC7 form, they could face freezing of funds and suspension of their account.
The platform could delete or restrict the user’s access until they provide the required information.
By completing the form, users must ensure compliance with their tax obligations, as the Tax Agency will be aware of their operations and they may face fines and penalties.
DAC7: Recommendations
As you can see, tax authorities increasingly have more resources to track taxpayers’ actual income and assets.
In this context, it’s best to comply with legal obligations and seek the assistance of tax planning experts to legally reduce tax payments.
If you offer services on digital platforms, at Nómadas Fiscales we can assist you in planning your international tax strategy, from changing tax residency to opening tax-free companies abroad.
If you want to receive a comprehensive analysis of your situation to discover your best options, simply fill out the form below and let us know your case and needs.
Contact us
The EU’s DAC7 Directive stipulates that digital platforms must annually report to tax authorities the income generated by their users. This affects platforms such as OnlyFans, Upwork, Fiverr, Amazon, and Vinted, among others.
It is crucial for those generating income through these platforms to be aware of their tax obligations.
DAC7 affects platforms that facilitate commercial transactions between users, such as sales of goods, provision of personal services, and rental of real estate or means of transport.
Examples include Airbnb, Uber, Patreon, Booking, Etsy, among others operating within the EU.
Users who exceed 30 transactions or earnings of more than €2,000 per year must complete the DAC7 form.
This includes information such as full name, tax identification number, bank account, and address, as well as details of transactions and payments received.
Non-compliance can lead to the freezing of funds and suspension of accounts by the platform.
Additionally, tax authorities may impose fines and penalties for failing to provide accurate and complete information.
