The EU has given member states until December 31 2022 to convert the DAC7 into national law, with implementation from January 1 2023, and the first data declaration to be completed by January 31 2024.
Amazon recently posted a notice on the seller background, asking sellers in Europe to provide information on compliance with the Administrative Cooperation Directive by October 1, 2023.
Amazon says that if your company is a local EU company that has generated sales of at least €2,000 or completed 30 or more orders during the year, it will have to provide the information required by October 1, 2023 under Amendment 7 of the Administrative Cooperation Directive.
If the seller does not submit the required information within 60 days of receiving the first notice, Amazon may deactivate your account and withhold your funds until the required information provided by the seller is approved and verified by the database.
1.What is the DAC7 directive
DAC7, called the Administrative Cooperation Directive (revised 7th edition), extends EU tax transparency rules to digital platforms. Online marketplaces, such as Amazon and ebay, are required to collect, verify and report VAT, tax and financial data from sales partners living in the EU. Member States will automatically transfer this information, which will not only allow national authorities to determine what is taxable, but also reduce the administrative burden on platforms, which will help member states better fight tax evasion. The EU member states can obtain the complete information of sellers on the digital platform through information exchange, and improve the efficiency of tax authorities' income tax and value-added tax administration.
2.Who needs' DAC7 'instruction validation
You will be affected if you:
Your company is established in any EU country/region (regardless of which mall you sell goods in); and
Sales of €2,000 or more and 30 or more transactions completed in the current or subsequent calendar years
3.How should sellers respond
As required by the regulations, Amazon will start deactivating non-compliant accounts on October 1, 2023, and sellers must complete the compliance requirements before then.
Qualified sellers need to carry out the following steps:
1) Report information
Sellers are required to add missing information and confirm existing information on the Amazon Seller Platform by October 1, 2023, or within 60 days of receiving the first notification from Amazon.
According to DAC7 directive, e-commerce platforms need to collect and report detailed information in the following aspects:
Seller's identity information:
· The seller is an individual: name, address, taxpayer identification number, VAT identification number (if any), date of birth, etc.;
· The seller is a business entity: business name, address, taxpayer identification number, VAT identification number (if any), business registration number, permanent establishment established for the purpose of carrying out relevant activities within the EU, etc.;
· Report the member state in which the seller is a resident;
· The seller's collection account and account holder's name;
· The total amount and number of transactions of sellers in each quarter;
· Quarterly commission and tax withheld by platform operators;
· For the seller offering real estate lease, the address, registration number, lease term, lease form and other information should be provided.
2) Check the information
When modifying added data, be sure to reconfirm all data and declare.
Note: In the third quarter of 2023, Amazon will provide links to upload missing information and confirm existing information.
The EU directive also aims to eliminate tax loopholes for commercial activities on digital platforms, in order to protect local tax revenues. The DAC7 law requires that the store may be closed and fined if it fails to comply with the provisions of DAC7. Therefore, obliged sellers should ensure that the information they provide is accurate, complete and in accordance with the legal requirements of EU Member States.