Non-paper of the Government of the Republic of Poland concerning possible impact of the DAC7 on the Digital Single Market

The main purpose and underlying assumptions of the legislative proposal of the European Commission

The legislative proposal, hereinafter: DAC7¹, is another legal measure designed to fight tax avoidance and tax evasion. The initiative provides Member States' tax authorities with adequate instruments for obtaining and subsequently exchanging information on transactions carried out through digital platforms.

A reporting obligation will be imposed on digital platforms and on Member States to transmit such information to other Member States.

Additionally, the DAC7 proposal includes other legal provisions broadening or correcting other legal forms of administrative cooperation of Member States (incl. joint audits and simultaneous controls).

Scope of data collected by digital platforms

New regulation, mentioned above, will introduce the obligation of collecting and verifying sellers’ data by platform operators, including collecting and verifying information, such as: first and second name, TIN, or in case of its unavailability, the functional equivalent of TIN - including each Member State of issuance, date and place of birth, in case of natural person.

Directions and priorities

In response to the initiative of the European Commission, the Ministry of Finance in cooperation with other governmental institutions in Poland, prepared the position of the Polish Government in this regard.

Afterwards, the Ministry of Finance, with the engagement of the Ministry of Economic Development, Labour and Technology, the Ministry of Digital Affairs, the Chancellery of the Prime Minister, the Personal Data Protection Office and the Office of Competition and Consumer Protection, prepared a Non-paper of the Government of the Republic of Poland concerning possible impact of the DAC7 on the Digital Single Market.

We focused on three key issues:

• Impact of the DAC7 on the European digital environment;
• European Union’s competitiveness;
• Private data protection of European citizens.

In our non-paper we formulated four postulates as follows:

1. Regarding private data protection of European citizens:

• Providing an exemption for occasional sellers, i.e. those who do not run business professionally, from being reported by platforms (threshold based on transactions frequency or accumulated value of transactions). It will address concerns expressed by European platforms regarding redundant data collection from non-professional sellers.
• We support the idea of collecting minimum data sets which are crucial for tax purposes. In light of the above, e.g. collecting information about place of birth might be redundant and exceed this minimal level of data collected. We also suggest supplementing the DAC7 with a clause regarding data storage period.

2. Regarding European Union’s competitiveness:

• We notice the need for conducting further work on the possibility of introducing new tools enabling efficient enforcement, in particular in regard to third countries’ platforms. The efficiency of the DAC7 can only be achieved, if effective and fair penalty mechanisms and appropriate level of enforcement are applied to platforms.
• We suggest conducting additional dialogue with European businesses and European experts on the digital economy regarding the potential impact of the Proposal on the provision of information society services and potential risks of non-coherence between the DAC7 and the VAT e-commerce package.

Poland will continue to actively participate in European negotiations.

We highly encourage you to get acquainted with the Non-paper of the Government of the Republic of Poland concerning possible impact of the DAC7 on the Digital Single Market.

 

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^{1 Proposal for a Council Directive amending Directive 2011/16/EU on administrative cooperation in the field of taxation - COM(2020) 314 final.}