What if you fail to meet the obligations placed on platform operators? Consequences of non-compliance with the requirement to report information on sellers

This article will answer the following questions:

• Are there any sanctions for failure to meet the obligation imposed by the EU DAC7 Directive to report data on sellers by platform operators?
• Who is subject to sanctions in the event of failure to exercise due diligence and meet the reporting obligations? 
• Is there a risk of fiscal penal liability for failure to meet the reporting obligations?
• How high are the financial penalties and fines for failure to meet the obligations related to the implementation of DAC7?

The regulations on reporting information on sellers, which became effective as of 1 July 2024, impose a number of new obligations on digital platform operators. The first of them – in the form of the requirement to comply with due diligence procedures – must be met by the end of December 2024 (and information about sellers dating back to 2023 will be subject to review and reporting). So what are the consequences of non-compliance with the obligations imposed by the DAC7 Directive implemented in Poland?

Sanctions for non-compliance with reporting obligations and failure to exercise due diligence 

Under the EU DAC7 Directive, sanctions for failure to comply with the obligations placed on platform operators are to be effective, proportionate and deterrent. In the remaining scope, the EU legislators leave Member States free to decide on the exact penalties.

Under the Act on the exchange of tax information with other countries, failure to comply with the obligations by: 

• reporting platform operators (this includes non-Union platform operators), 
• exempt platform operators,

is subject to a financial penalty.

The reporting platform operator may be penalised, among other things, if they fail to provide the Head of the National Revenue Administration with information about sellers before the deadline set for this very purpose.

The exception in the above case will be a situation in which the operator, despite summonses and enforcement measures demanding information subject to reporting, does not provide it to the tax authority due to failure to receive the relevant data from the seller. 

A penalty may also be imposed in the event of failure to comply with a repeated request from the Head of the National Revenue Administration to submit or rectify information on sellers or failure to exercise due diligence procedures (including failure to meet the obligation to gather documents pertaining to these procedures). 

An exempt platform operator may be punished with a financial penalty in the event of failure to comply with the obligation to provide the Head of the National Revenue Administration, within the scope of the required information on sellers, with information that the business model adopted by the platform does not include sellers subject to reporting.

What else can platform operators be penalised for?

Not only failure to fulfil reporting obligations and due diligence procedures is subject to sanctions. A platform operator may also be fined if they fail to provide (before the set deadline) a seller subject to reporting with information that apply to them (and are provided to the Head of the National Revenue Administration).

In the case of platform operators from outside the EU, a fine may be imposed for failure to fulfil their obligations in the scope of: 

• notifying the Head of the National Revenue Administration about the selection of a Member State other than Poland in which the platform operator will fulfil the obligations arising from the DAC7 Directive, or 
• effecting a one-time registration in Poland, necessary in the event of failure to register in another selected Member State.

In addition, a fine may be imposed for failure to fulfil the obligations arising from an inspection carried out at the platform operator or – in cases where an inspection is not required, but the tax authority has questions related to the implementation of the obligations related to the DAC7 Directive – failure to provide the Head of the National Revenue Administration with relevant explanations.

Amounts of financial penalties for failure to fulfil obligations imposed by DAC7 

The upper limit for the financial penalty imposed on platform operators by the Head of the National Revenue Administration by way of a decision is PLN 1,000,000. 

The exact amount of the penalty depends on the type and scope of the unfulfilled obligations and whether and how the taxpayer has performed the relevant activities so far. 

A factor influencing the severity of the penalty will also be the amount of the total turnover of the entity breaching the regulations (for the financial year preceding the year of imposition of the penalty; in the case of a platform operator initiating their activity, it will be the period from the commencement of business activity to the date of initiation of the proceedings to impose a financial penalty).

Fine imposed on platform operators for a fiscal offence or fiscal misdemeanour 

The Fiscal Penal Code has introduced a regulation according to which a fine (up to 180 daily rates) is imposed on the entity acting on behalf of or in the interest of the reporting platform operator for failing to meet the obligations including:

• exercising due diligence procedures, including collecting the required documentation,
• providing the Head of the National Revenue Administration with information about sellers,
• one-time registration of the platform operator in Poland (in the absence of registration in another selected Member State),
• removal of irregularities indicated as a result of the inspection within a given period.

Please be reminded that from 1 July 2024, the daily rate ranges from PLN 143.33 to PLN 57,332, and in order to determine it, the perpetrator's income, personal and family conditions, as well as property relations and earning capacity are taken into account. Thus, the lowest possible fine imposed on platform operators will be PLN 1,433.33 and the highest – PLN 10,319,760.

Failure to meet the obligations by an entity acting on behalf of or in the interest of the reporting platform operator is reclassified from a fiscal offence to a fiscal misdemeanour if it is a case of a minor infringement. 

The fine for such a misdemeanour is imposed in a specified amount and from 1 July 2024 ranges from PLN 430 to PLN 86,000.

Limitations on sanctions for the period from 1 January 2023 until 30 June 2024

In relation to activities that the platform operator enabled the seller to perform in the period from 1 January 2023 to 30 June 2024, the entity is not subject to punishment if it holds evidence that it has unsuccessfully requested information from the seller for the second time or that requesting the information from the seller was not possible. In such a case, the Polish tax authorities also do not initiate proceedings in cases of fiscal offences or fiscal misdemeanours.