DAC 7 is in force: Quick remediation of past “errors” highly recommended!

Starting with 2024 the Austrian tax authority receives information on persons using digital platforms for renting and selling. If you use digital platforms for renting and selling you should absolutely keep an eye on the following amendment:

The Austrian Digital Platform Reporting Requirement Act (DPMG) entered into force on 1 January 2023. The DPMG requires operators of certain digital platforms to report tax-relevant information on so-called “Anbieter” (“suppliers”) on these platforms to the Austrian tax authority. The DPMG is based on an EU directive which among others aims to prevent tax evasion (Directive EU 2021/514, “DAC 7”). For more details, please see our DAC 7 microsite.

Who is concerned?

The DPMG concerns persons /suppliers registered on a digital platform and providing – via the platform – one of the following activities against consideration:

• • • renting or leasing immovable property,
    • providing personal services,
    • selling goods (as from 30 sales for over EUR 2,000 in total per year),
    • renting of any mode of transport.

These activities may (depending on the individual case) be subject to income tax or corporate income tax and VAT. In some cases – whether consciously or not – the income might not (or in a too low extent) be disclosed to the Austrian tax authority by suppliers. The new reporting requirements aim to prevent tax evasion and to give the authorities the possibility to check the correct taxation .

What data does the Austrian tax authority receive?

In order to enable or simplify verifying proper taxation for the Austrian tax authority, the platform operator must now report among others the following information to the Austrian tax authority:

• • • the amount of consideration per quarter,
    • the number of relevant activities (rentals, sales, etc),
    • the fees, commissions or taxes that the platform operator withholds or charges.

Regarding rentals and leases, the number of days on which the property unit was rented or leased is reported per listed unit as well.

The information is reported ex post for the previous calendar year. For the first time this information is reported at the beginning (31 January) of 2024 for the year 2023. Even though for the prior years no DAC 7 reporting is required by platform operators, it is still expected that the Austrian tax authority will make inquiries regarding prior years based on the reported data even in case of tax compliance in 2023. This is why also in such cases it is highly recommended to remediate the past.

Which consequences are expected for delinquent suppliers?

In case no or too low income and/or revenue was disclosed to the Austrian tax authority despite being subject to taxes this is punishable by law as (intentional) tax evasion pursuant to sec 33 para 1 Austrian Tax Criminal Code (TCC). This is punishable by a maximum fine of 200% of the amount evaded and possibly by a maximum fine of four years of imprisonment. Grossly negligent tax reduction is punishable by law as well (by a fine of up to 100% of the amount evaded).

The amount evaded is the difference between the proper tax amount and the actually paid tax amount.

How to avoid consequences

Those who react on time may have the possibility to avoid any potential consequences under tax criminal law by submitting a voluntary self-disclosure. This requires among others to disclose the misconduct and to disclose to the Austrian tax authority all information needed to proper levy the tax claims. Moreover, the amount reduced is to be paid within a certain period to compensate the damage.

Submitting a voluntary self-disclosure to avoid fines is possible in case the act has not yet been discovered by the authorities and the offender is aware of the discovery, no acts of prosecution were initiated and no tax audit is running.

Attention: For time periods prior to 2023 the need for remediation by submitting a voluntary self-disclosure is to be assessed in any case prior to submitting the first DAC 7 reporting (i.e. until end of 2023).

It is essential that the voluntary self-disclosure formally and materially (especially correctly and completely) complies with the legal provisions. If there are any errors, the self-disclosure (partially) loses its effect of gaining impunity, and no corrections can be made retrospectively.

Our experts are happy to consult and support you in risk assessment and in preparing and submitting a voluntary self-disclosure.

Authors: Mario Wegner / Daniel Wagner