In brief
In anticipation of the EU DAC 7 initiative, Belgium has recently introduced “DAC 7 light” reporting obligations for digital platform operators in the sharing and gig economy. The goal is to render the income realized by service providers through these platforms more transparent and to prevent avoidance or fraud from a tax and social security perspective.
The reporting obligations target digital platform operators that remotely connect service providers to their customers through the platform. The scope of the reporting obligations is in this context limited to the provision of services with a Belgian nexus by individuals through the platform.
The reporting obligations of the platform operator consist of a general obligation to inform the relevant service provider of his/her tax and social security obligations, and of a reporting obligation to provide the service provider and the Belgian tax authorities with an electronic overview listing relevant information with respect to the relevant services and the latter no later than 31 March of the year following the year in respect of which the information is given to the users (for the first time no later than 31 March 2022).
The relevant legal provision containing the above-mentioned obligations entered into force on 9 January 2021 and requires immediate attention from targeted platform operators.
Key takeaways
- As a precursor to the EU DAC 7 initiative, the Belgian legislator has recently introduced reporting obligations for digital platform operators, applicable as of 9 January 2021.
- Belgian and foreign operators of digital platforms through which services with a Belgian nexus are provided by an individual are caught by these new DAC 7 light reporting obligations in Belgium. It is in this context irrelevant whether the service provider acts in a professional or private capacity.
- Foreign platform operators without branch or establishment in Belgium are required to appoint a representative in Belgium who will be personally liable for carrying out the reporting obligations, and inform the Federal Public Service of Economy thereof.
- The reporting obligations of the platform operator under the Belgian initiative are twofold:
- a general obligation to inform the relevant service provider of his/her tax and social security obligations;
- an obligation to provide the service provider and the Belgian tax authorities with an electronic overview containing relevant information with respect to the relevant services no later than 31 March of the year following the year in respect of which the information is given to the users (for the first time no later than 31 March 2022).
- Penalties may be applicable in case of non-compliance.
- This DAC 7 light obligation is temporary and will cease to exist once the EU DAC 7 proposal is adopted and implemented into domestic law.
In depth
In July 2020, the European Commission submitted a proposal to amend the EU Directive 2011/16/EU on administrative cooperation in the field of taxation to target, amongst others, the challenges arising from the digital platform economy by introducing certain reporting obligations on platform operators and providing for an automatic exchange of the reported information (DAC 7).
In anticipation of this DAC 7 proposal being adopted at EU level, Belgium decided to already introduce “DAC 7 light” reporting obligations for digital platform operators in the sharing and gig economy by a specific legal provision (Article 321quater of the Belgian Income Tax Code) that was introduced by the Law of December 20, 2020. The goal of this provision is to render the income realized by service providers through these platforms more transparent and to prevent avoidance or fraud from a tax and social security perspective.
Even though one of the objectives of the EU DAC 7 proposal was exactly to avoid several unilateral reporting obligations applying at the same time to digital platform operators, which entails a significant and even disproportionate administrative burden, the Belgian Government nevertheless thought it necessary to introduce such a reporting obligation at this point in time. The obligation entered into force on 9 January 2021 and will remain in force until the EU DAC 7 proposal is adopted and implemented into domestic law, at which point the current provision will cease to exist.
The new Belgian reporting obligation targets operators of digital platforms in the sharing and gig economy that remotely connect service providers to their customers. The scope of the reporting obligation is in this context limited to the provision of services through the platform. The scope is hence more narrow than what will be the case once the DAC 7 proposal is adopted and implemented into domestic law, given that the latter is also applicable to the sale of goods.
The supplies of services in scope of this new reporting obligation are the supplies of services within the meaning of the Belgian VAT Code. Such services are only targeted however to the extent that they are rendered by an individual, irrespective of whether the latter is acting in a professional capacity or not. The services in scope will also need to have a Belgian nexus in order to be reportable, in the sense that the service needs to be rendered by a Belgian resident service provider or needs to take place in Belgium (this is not explicitly determined but we expect that the VAT place of supply rules will apply to determine whether or not the service is deemed to take place in Belgium).
To be noted that foreign platform operators can also be subject to the reporting obligation. In cases where the foreign platform operator has no branch or establishment in Belgium, it is required to appoint a representative in Belgium who will be personally liable for fulfilling the reporting obligation and needs to inform the Federal Public Service Economy thereof by providing a copy of the agreement with the representative.
If subject to the new reporting rule, the online platform operation will need to carry out the following information and reporting obligations:
- Inform the service provider, upon every new service agreement that is concluded through the platform, of his/her tax and social security obligations with a mention of the links to the websites of the tax and social security authorities where these obligations can be met and with a mention, if applicable, of the platform operator’s representative;
- Provide the service provider, at the latest by 31 March of the year following the year in which the services concerned are delivered (for the first time by 31 March 2022), with an electronic overview of the following information: (i) the identity and TIN of the user (i.e. service provider) or, if the TIN is not available, his full name, address and birthdate; (ii) the starting or termination date of the service; (iii) a description of the services provided by the user; (iv) the gross amount of the transactions carried out by the user through the platform, if applicable broken down according to the nature of the services provided; and (v) – if appropriate – the amount and nature of any sums retained, again broken down according to the nature of the services provided.
- An electronic summary of the latter document must be submitted to the Belgian tax authorities no later than 31 March of the year following the year for which the information is provided (for the first time by 31 March 2022).
An exclusion to the above-mentioned obligations (ii) and (iii) is provided for certified digital platforms, given that a specific reporting obligation already applies for these platforms under Article 90, second paragraph, of the Belgian Income Tax Code.
A Royal Decree will be issued that will determine the form that can be used to report the information to the Belgian tax authorities and that will also provide further guidance on the way the services will need to be described. We are also hopeful that the tax authorities will issue further practical guidance on this.
There is no specific penalty provided in the Belgian Income Tax code for non-compliance with the above-mentioned reporting obligations. However, the general penalty provisions of the Belgian Income Tax Code can apply given that the non-, late or incomplete reporting would lead to an infringement of a legal provision in the Code. This could hence entail an administrative fine ranging from EUR 50 (for first violation) to EUR 1,250 (to be applied per violation).
