DAC7 platform reporting obligation - FAQs
This article contains a list of frequently asked questions concerning the new DAC7 platform reporting obligation.
What is DAC7?
DAC7 is a new set of tax transparency rules that apply across the European Union (“EU”) from 2023. Digital platforms like Zalando must report certain master as well as transactional information about their partners (“reportable sellers”) to the tax authorities (refer to the question “Which tax information reports towards the tax authorities?”). Digital platforms must report information once per year. For instance, with respect to 2024, the information will be reported in January 2025. In case of any customer’s returns, Zalando must submit supplementary information to the tax authorities.
The DAC7 rules were enacted based on the Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation and the German DAC7 Implementation Act ‘Platfformen-Steuertransparenzgesetz’ (PStTG). Zalando submits the relevant tax information towards the German tax authorities only because of its German tax residency status.
Which partners do the DAC7 reporting obligations apply to?
DAC7 applies basically to all EU-established partners who use Zalando platforms (Partner Program and Connected Retail) in order to sell goods to end consumers and exceed the quarterly minimum threshold (€2,000 remuneration or 30 orders). DAC7 applies as of 2023 and going forward. Transactions that took place prior to 2023 are not in the scope of DAC7 rules and will not be reported. DAC7 applies to both - individual entrepreneurs and legal entities.
A transition period was applied for 2023 to all DAC7 relevant platforms. Zalando submitted the relevant information of such partners to the tax authorities who started selling in 2023.
Why is Zalando subject to DAC7 reporting?
These new rules apply to all digital platforms (including Zalando) that facilitate, among other things, the sale of goods to end consumers.
What information does Zalando report to tax authorities?
We are obliged to collect and share the following information with tax authorities depending on whether you are an individual or a legal entity:
| For sole proprietorships | For legal entities |
|---|---|---|
1. | First and last name | Registered name |
2. | Address of residence | Address of registered office |
3. | Taxpayer identification number or place of birth | Taxpayer identification number |
4. | VAT identification number (if available) | VAT identification number (if available) |
5. | Date of birth | Business registration number |
6. | Bank account number used to receive payouts from Zalando | Bank account number used to receive payouts from Zalando |
7. | Holder of the bank account | Holder of the bank account |
8. | Total remuneration charged or credited in the reporting quarter | Total remuneration charged or credited in the reporting quarter |
9. | Fees, commissions or taxes withheld or charged in the reporting quarter | Fees, commissions or taxes withheld or charged in the reporting quarter |
10. | Number of relevant activities for which remuneration was paid or credited in the reporting quarter | Number of relevant activities for which remuneration was paid or credited in the reporting quarter |
11. | EU Member State(s) of tax residency (based on the information provided to us) | EU Member State(s) of tax residency (based on the information provided to us) |
12. |
| Local tax Ids of all permanent establishments in the EU (if involved in the sale of goods) |
Zalando will collect this information in the course of a year and report it in January of the following year.
How will the tax authorities use this information?
The overall goal of introducing the DAC7 rules is to improve tax transparency around transactions that take place on digital platforms. The exact use of DAC7 information by tax authorities may differ depending on the EU state in which your business is established. In principle, the main goal of the DAC7 reporting is to simplify the process of verifying income tax statements.
Does Zalando share what has been submitted with partners?
Yes, we provide all our affected partners with a summary in a PDF file uploaded to your zDirect account.
Why do the figures in the Zalando sales reports differ from the DAC7 information?
Please note that the sales reports are based on the actual shipment dates of the customer’s parcels whereas the DAC7 information is based on the payment dates of our payouts to partners.
How long will Zalando keep the submitted information?
We are obligated to retain the reported information of the DAC7 reports for a period of ten years.
Do partners need to report to the tax authorities themselves or will Zalando take care of the reporting?
Partners are not required to report any information to the tax authorities as part of the DAC7 reporting. Digital platforms like Zalando are responsible for collecting and reporting information on an annual basis (excluding amendments). At the same time, we reach out to our partners to provide some additional information to us (e.g.: tax identification numbers, registered legal name, official address).
How is Zalando going to make sure that the information is accurate?
Digital platforms are obligated to determine whether the information they collect about partners (aka ‘reportable sellers’) is reliable. In the first place, we will rely on the information provided by the partners to us at the time of onboarding. If we notice discrepancies or missing information, we reach out to our partners to update the relevant information.
What if partners do not provide the requested information?
If Zalando is missing some information, we will request the required information. If partners are non-responsive, we are required by law to disable all of the partner’s accounts for all sales channels on Zalando, until we receive the required information. During the time of deactivation, partners are not able to sell their products on the Zalando platforms.
Does Zalando have all of the required information?
In most cases, Zalando already has all or almost all of the information that is required under the DAC7 rules. If Zalando is missing some of the required information, we will reach out to request this information.
What rights do partners have from a GDPR perspective?
With regard to the data processing by the competent tax authority, partners have the following rights vis-à-vis the competent tax authority:
Right to information,
Right to deletion
Right to correction
Right to restriction of processing
Right to data portability
Right to lodge a complaint with a data protection supervisory authority
Right to withdraw consent
Right to object to particular data processing measures.
Partners may contact the relevant tax authority if they wish to exercise any of the rights described.