Notification obligations of platform operators

In 2023, we informed you about the effectiveness of the implementation of the European Directive DAC 7 (Council Directive 2011/16/EU of 15 February 2011) into the Czech Act on International Cooperation in Tax Administration. The aim of the implementation of the Directive into the local legislation of the Member States is to give tax administrations a suitable IT tool to collect and exchange information on entities that generate their profits using a digital platform and thus ensure proper taxation in terms of all taxes.

DAC 7 concerns cooperation across European countries. Following DAC 7, 25 OECD countries have signed a multilateral agreement that should allow the exchange of DAC 7-related information with non-EU countries. If the platform operator is established in a Member State or a state that accedes to this agreement (a Qualifying Contracting State) it may fulfil its reporting obligation in that state. The list of states that have acceded to the implementation of the international agreement is published by the Ministry of Finance in the Financial Bulletin.
 
By 31 January 2024, operators of digital platforms are obliged to provide the tax authorities with information on sellers who carried out the following activities through the platform in 2023:
 

• the provision of immovable property;
• the provision of a means of transport;
• personal service;
• sale of goods.

The notification obligation towards the Czech tax administrator also applies to platform operators who are established outside the Czech Republic if the platform they operate facilitates the above-mentioned activities of sellers who are residents of the Czech Republic or the rental of immovable property located in the Czech Republic. It also applies if the notification obligation has not been fulfilled in another Member State or in a Qualified Contracting State where other sellers using the platform are established. 
The Notification of Notifiable Activities by Notified Sellers form is available from January 2024 in the authenticated zone on the MY Taxes portal. The platform operator (depending on the type of operator) can access it based on:

• applications for registration of a non-established platform operator; 
• notification of the Czech notifying platform operator. 

In the authenticated zone, it is possible to report a change in registration data, to report the termination of the reporting obligation, to report the fulfilment of a condition for exclusion from the reporting obligation, etc.
The notification must be accompanied by an XML file containing the relevant information on the notified vendors according to DAC7. The file should contain the information that platform operators were required to collect in 2023. This includes:

• identification data of the platform operator (name, registered office address, VAT number);
• the platform's identification number and its business name;
• the data found on the notified seller;
• identification details of the seller's bank account;
• the number of activities performed for which the seller received consideration;
• details of the commission, tax or fee that has been deducted from the sale price or charged to the seller for the benefit of the notifying platform operator.

In the case of activities other than the provision of property, the notification must include: 

• the retailer's sales for the quarter;
• the number of activities from which revenue was generated in the quarter.

If the 31 January 2024 deadline is not complied with, the tax administrator may impose a fine of up to CZK 1.5 million on the notifying platform operator. The platform may then be included in the list of non-cooperative platforms, upon which the tax administrator is entitled to issue a measure of a general nature prohibiting sellers from carrying out the notified activity through the platform.

Example
The operator of the platform is the parent company based in the USA. 
Through the platform, subsidiaries based in the Czech Republic sell their goods to end customers.
The US has not signed a multilateral information exchange agreement and is not a qualified state in which the registration and subsequent reporting obligations of the platform operator could be met.
Both the registration and notification obligations of the platform operator should be fulfilled in the Czech Republic, as the state of operation of the platform operator, or in another Member State where other sellers using the platform for notifiable activities are located.

If you, as a platform operator, have any doubts as to whether you are subject to the registration or reporting requirements in the Czech Republic, we are ready to assist you.