Everything you need to know about DAC7 for your online business
If you’re running an online business in Ireland, DAC7 is an important element you can’t ignore. This new EU rule puts the spotlight on how online platforms report sellers’ earnings and ensure proper tax payments. Whether you’re new to DAC7 or need some extra guidance, we’ve got you covered with everything you need to know.
Here’s what we will cover:
What is DAC7?
DAC7 is a new law from the European Union that requires online platforms to report sales made by their users. This includes selling products, services, or renting property. The aim is to make sure people pay the right amount of tax on what they make. If you’re running or using an online platform in Ireland, you need to understand DAC7 to stay compliant with the rules.
DAC7 reporting obligations for platform operators
Since DAC7 came into effect in 2023, online platforms like Amazon must report how much money sellers make and their business details. If you’re a business in Ireland using an online marketplace for EU customers, there are annual reporting rules for the platform providers. Online platforms must ensure that sellers are paying the correct amount of tax on their income by sharing key information with tax authorities, such as:
- How much sellers are making.
- What they are selling.
- How many transactions are happening.
DAC7 Vinted, Etsy, Depop: Which businesses must follow the rules?
The DAC7 tax rules affect online platforms that make it easy for people to sell goods, rent properties, or offer transportation. This includes popular platforms like eBay, Airbnb, Depop, Etsy, and Vinted. If your platform connects buyers and sellers and involves transactions with EU customers, these rules apply to you, whether you’re based inside or outside the EU. If you help people make sales or bookings online, you need to follow DAC7 rules.
Platform operators must gather and share information about “reportable sellers” with tax authorities to ensure they pay the right tax. Larger businesses like government agencies, hotel chains, and publicly listed companies don’t need to follow these rules or report their sellers.
What are reportable sellers?
A reportable seller is someone who sells on an online platform and meets certain conditions. This includes selling goods, offering personal services, or renting out property. For example, if someone rents their apartment on Airbnb or sells used clothes on Vinted, they would be considered a reportable seller. If their earnings meet the required threshold, the platform operator must share their information with tax authorities.
Which sellers are exempt from DAC7 reporting obligations?
In Ireland, some sellers are exempt from the DAC7 reporting rules. This includes listed companies, government organisations, and sellers who meet certain conditions. For example, sellers with over 2,000 rental transactions a year don’t need to be reported. Also, sellers with fewer than 30 transactions or less than €2,000 in sales each year are exempt. Sellers who handle payment processing, advertising, or redirect customers are also not required to report.
What information must be included in the DAC7 form?
The DAC7 form in Ireland must include the following:
- sellers’ details
- tax and business registration numbers
- payment and fee data
- property rental information
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When is DAC7 reporting due?
In Ireland, the deadline for DAC7 reports is 31st January each year, covering the previous year. The first report was submitted by 31st of January 2024, covering transactions from 2023. Therefore, transactions for 2024 will be reported by 31st January 2025.
What is the DAC7 threshold In Ireland?
In Ireland, DAC7 applies to EU-based sellers if they go over a threshold of €2,000 in earnings or 30 orders during the reporting period.
How will the tax authorities use the DAC7 information?
The tax authorities will use the DAC7 information to make sure sellers are paying the right amount of tax. They will compare the data with tax returns to spot any mistakes or missing income. This helps ensure everyone is paying their fair share of tax.
How Tax Return Plus can help you to declare your online income
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FAQs
1. Who qualifies as a reporting platform operator?
A reporting platform operator is any business that runs an online platform where sellers can list and sell goods, offer services, or rent property. If the platform helps buyers and sellers make transactions with EU customers, the operator must share the seller’s information with the tax authorities.
2. Is DAC7 a one-off or ongoing reporting obligation?
DAC7 is an ongoing reporting obligation. Platform operators must submit reports every year, updating the tax authorities on sellers’ activities and earnings for the previous year.