DAC7 directive: what activities and information does the reporting obligation cover?

This article will answer the following questions:

• What is the definition of relevant activities?
• What data about sellers should be collected by the operators of sales platforms?
• Is a natural person conducting business activity considered a seller who is an individual or an entity under the law?

According to the EU DAC7 directive, digital platform operators are required to report information on sellers – i.e. users of the platform who are either individuals or entities who are registered on the platform at any time during the reporting period (calendar year) and perform relevant activities. How do the provisions of the DAC7 directive and the Polish act that implements it understand the concept of relevant activities and what information about sellers is subject to reporting?

What are relevant activities?

According to the definition given in the DAC7 directive, the relevant activity is one of the following (performed for consideration) activities: 

1. the rental of immovable property, including both residential and commercial property, as well as any other immovable property and parking spaces – whereas the Polish Act indicates that making immovable property available and making a share in it or a part thereof available are also considered to be relevant activities; this also applies to the adjacent premises,  
2. a Personal Service – i.e. a service that involves work performed in a time-based (or task-based) mode by one or more individuals, acting either independently or on behalf of an entity. Such work must be performed at the request of a user online or physically offline, after being facilitated by a platform,
3. the sale of Goods – the DAC7 directive identifies all tangible assets as goods; the Polish act refers to the definition of goods within the meaning of Article 45 of the Civil Code,
4. the rental of any mode of transport.

The exception to the above definition are activities performed by a seller who is an employee of the reporting platform operator or a related entity of the platform operator. 

What seller-related data will be transferred under DAC7 by the platform operator? 

As a rule, the platform operator is obliged to collect such data of sellers as:

1. the first and last name/legal name of an Entity,
2. the Primary Address,
3. any TIN of the Reportable Seller, including each Member State of issuance, or, in the absence of a TIN, the place of birth of the Reportable Seller who is an individual,
4. the VAT identification number of the Reportable Seller, where available,
5. the date of birth of the Reportable Seller who is an individual,
6. the business registration number of the Reportable Seller that is an Entity (for a Polish entity, this will be the KRS number), 
7. information on the existence of any permanent establishment through which Relevant Activities are carried out in the Union, where available, indicating each respective Member State, where such a permanent establishment is located (in the case of entities),
8. the Financial Account Identifier (i.e. bank account) – insofar as it is available to the Reporting Platform Operator and the competent authority of the Member State where the Reportable Seller is resident has not notified the competent authorities of all other Member States that it does not intend to use the Financial Account Identifier for this purpose,
9. where different from the name of the Reportable Seller, in addition to the Financial Account Identifier, the name of the holder of the financial account to which the Consideration is paid or credited, to the extent available to the Reporting Platform Operator, as well as any other financial identification information available to the Reporting Platform Operator with respect to that account holder, 
10. each Member State in which the Reportable Seller is resident,
11. the total Consideration paid or credited during each quarter of the Reportable Period and the number of Relevant Activities in respect of which it was paid or credited,
12. any fees, commissions or taxes withheld or charged by the Reporting Platform during each quarter of the Reportable Period.

The scope of data that the regulations will require platform operators to collect will be very similar for individuals and entities that are not individuals (e.g. limited liability companies, civil partnerships). However, it is worth noting some basic differences. 

Which category of sellers includes individuals running a business activity?

The EU DAC7 directive and the Polish Act do not indicate whether sellers who are natural persons conducting business activities should be classified as sellers who are individuals or as entities. 

Based on the definition of an entity set out in the DAC7 directive and the Act – according to which an entity is understood as a legal person, an organisational unit without legal personality or a legal arrangement, including a company, foundation and trust – it appears that the concept of a seller who is an individual also includes a natural person conducting business activity.