Cryptohopper Implements DAC 7 for Marketplace Sellers

On 22 March 2021, the Council of the European Union formally adopted the Council Directive amending Directive 2011/16/EU on administrative cooperation in the field of taxation (also known as DAC 7) that would extend the scope of the existing provisions on exchanges of information and administrative cooperation between the member states by requiring digital platforms to collect and report information on the income realized by sellers offering certain services.

Additional reporting rules for platform operators

The reporting rules for platform operators apply in respect of trading platforms that allow sellers to be connected with customers for the provision of:

• The sale of goods

• The rental of immovable property (e.g., accommodation);

• The provision of personal services (time- or task-based work carried out either online, or physically offline after having been facilitated via a platform); and

• The rental of any mode of transport.

The rules are designed to assist tax authorities to identify situations where taxes (in particular VAT and income tax) should be paid, and to reduce the administrative burden on platforms by standardising the reporting requirements in each Member State and requiring reporting in only one EU Member State.

The directive generally follows the principles outlined in the Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy developed by the Organisation for Economic Co-operation and Development and covers digital platforms located both within and outside the EU, where they have a qualifying nexus with the EU.

The rules will apply from 1 January 2023.

Information to be reported

Under the directive, reporting platform operators would be required to collect and report extensive information in respect of reportable sellers on their trading platform including:

• names;

• addresses;

• tax information numbers;

• dates of birth;

• VAT identification numbers;

• business registration numbers,

• information in respect of any permanent establishments in the EU;

• financial account Identifiers;

• the address and land registration number of each property listing;

• the number of days each property listing was rented;

• total consideration paid during each quarter; and

• any fees, commissions or taxes withheld or charged by the platform during each quarter.

The reporting platform operator must verify this information in accordance with due diligence procedures by 31 December of the reportable period. The reporting platform operator must provide a copy of the information to each individual reportable seller before it is reported to the relevant competent authority.

Additional provisions in DAC7

Other improvements to the EU administrative cooperation in the field of taxation introduced by DAC7 include:

• The clarification of the term ‘foreseeable relevance’ for the purposes of exchange of information upon request;

• The rules on exchange of information upon request for group of taxpayers;

• The extension of categories of income subject to mandatory exchange of information to royalties;

• The new rules for carrying out simultaneous controls and allowing officials of a Member State to be present in another Member State during an enquiry; and

• A framework for joint audits to be conducted by the competent authorities of two or more EU Member States.

The press release issued by the Council of the EU may be accessed here.

What this means for you

Since Cryptohopper offers a Marketplace, we must comply with the new regulations of DAC 7.

We implemented a KYC verification flow Marketplace Sellers must complete before we can process your payouts again. We kindly ask you to log in to Cryptohopper and complete the KYC process.

Make sure to have your identification ready before entering the KYC process. The KYC process takes only 5 minutes to complete, after completing, we will verify your details, which can take up to 1 minute. Depending on your country, it can take longer.

You will need to redo the KYC for every account if you have multiple seller/marketplace accounts (for example, multiple signaler accounts).

If you have questions, please get in touch with [email protected]

Thank you for understanding.