Belgium anticipates DAC 7: New Belgian reporting obligations for digital platforms facilitating the provision of services – Taxation

General

Digital “collaboration” platforms that connect service providers with their customers are subject to new reporting obligations. These were introduced because many service providers (including Airbnb providers) apparently would not report their income earned through these digital platforms. Until the introduction of the new reporting obligation in the Belgian Income Tax Code, it was difficult for the Belgian tax administration to trace these revenues or, for example, to identify these providers for an audit. According to parliamentary preparatory texts, the purpose of this obligation is to increase transparency on the income generated by these platforms and thus to fight against any omission or fraud relating to the declaration of such income.1 The new provision introducing this obligation is applicable from January 9, 2021.

Scope

The services to be declared are those which are defined as “services” by the Belgian VAT Code and which are supplied to natural persons (C2C) or legal entities (C2B) in Belgium by a natural person who is a Belgian resident or not. . It does not matter whether the service provider is acting within the framework of a professional activity.

Obligations

The new regulation obliges the digital platform to inform all its users offering services via its platform of their Belgian social and fiscal obligations. They must even be provided with an electronic link to the websites of Belgian public services for the purposes of these social and fiscal obligations.

In addition, the digital platform is required to deliver to its users an electronic document indicating, among other things, their known identity, their tax number2 or (if they do not have one) full name and address, the date of launch or end of the activity on the platform, the description of the services provided by the user, the gross amount of the transactions carried out by the user via the platform, broken down if necessary according to the nature of the service provided and – where applicable – the amount and nature of any sums withheld. A summary of this document must also be submitted to the tax authorities no later than March 31 of the year following that for which the information is provided. This means that such a document must be submitted for the first time before March 31, 2022.

Registration for non-Belgian platforms via a representative in Belgium

When the digital platform is established abroad and has no branch in Belgium, it is required to appoint a representative in Belgium who is responsible for fulfilling the obligations as described above. The digital platform will also have to declare this information to the Belgian Ministry of the Economy and submit the written agreement with its Belgian representative.

Authorized electronic platforms

These information obligations of the service provider and the tax administration do not apply to information communicated by “authorized electronic platforms”3 to the recipient of the receipts and to the competent tax authorities under article 90, paragraph 2, of the Belgian Income Tax Code. The obligation to inform the recipients of this income of their social and fiscal obligations already applies to these “authorized electronic platforms”.

Penalties

As no specific tax penalty is linked to these new reporting obligations, the general penal provisions of the Belgian Income Tax Code apply, namely the administrative fine ranging from EUR 50 to EUR 1,250 per offense (article 445 CIR 1992).

CAD7

In mid-2020, the European Commission proposed to amend the Administrative Cooperation Directive by also extending EU tax transparency rules to digital platforms (DAC 7).4As soon as these future reporting obligations enter into force in Belgian national law, the Belgian information obligation will cease to apply. Based on the current DAC 7 proposal, so-called “platform operators” will be required to provide information on income from transactions made through the platform to a national tax authority. In addition, they would also be required to provide certain information (for example, an overview of the income that a seller / supplier generates from the relevant activities, an overview of the commissions and fees that the platform grants to the sellers / suppliers) about the sellers of goods. and service providers. This national tax authority will then automatically exchange this information with other national tax authorities in other European Member States.

Referral by Belgium to the European Court of Justice

Despite the new Belgian declaration obligation, the preliminary questions raised following the judgment of the Belgian Constitutional Court of November 26, 2020 should be borne in mind.5 The judgment was motivated by an action for annulment against the information obligation contained in the Brussels regional tax on tourist accommodation imposed by Airbnb. In this regional tax, a similar declaration obligation has been provided for intermediaries for tourist accommodation establishments located in the Brussels-Capital Region.

Airbnb argued that the information obligation under this regional tax is essentially an unauthorized restriction within the meaning of the European Directive on Electronic Commerce.6 This Directive aims to ensure that Member States do not restrict the free movement of “information society services” provided from another Member State more than necessary and proportionate. However, this directive does not apply to the field of taxation. In this context, the Belgian Constitutional Court put a number of preliminary questions to the Court of Justice; the most relevant of which are: “Does the imposition of an information obligation in the context of taxation fall under the exclusion of” taxation “within the meaning of the Directive on electronic commerce? Moreover, if not, does the information obligation go beyond what is necessary and proportionate? ”.

The outcome of these preliminary questions and the subsequent judgment of the Constitutional Court will also be decisive for the assessment and the “viability” of the new Belgian declaration obligation, provided for by federal tax legislation (as opposed to the question asked before the Court of Justice, which concerned a regional tax). If the obligation to provide information in respect of the Brussels regional tax is to be considered as contrary to this directive on electronic commerce, then it could be argued that the new – federal – declaration obligation also violates this directive, given that the two reporting obligations are quite similar and have essentially the same purpose. Although the federal declaration obligation concerns “services” in general, whereas the Brussels regional tax only concerns information relating to a specific type of service (provider), it is questionable whether this difference would justify a different treatment. It could perhaps be considered prudent that the Belgian legislator waited to introduce the new, more general declaration obligation to obtain more clarity from the European Court of Justice. But one can also wonder whether the Belgian authorities are really concerned about the outcome of these preliminary questions. After all, by the time the European Court of Justice has ruled on the case of the tourist accommodation tax in Brussels, CAR 7 could already be transposed into domestic law and discussions on this new declaration obligation will be – to that time – became a rearguard action.

Conclusion

DAC 7 is coming and the Belgian prelude to it may seem unusual and raise some questions in the light of the case law pending before the European Court of Justice concerning a similar provision. However, there is and adds an additional (temporary) layer of compliance obligations for digital platforms operating “in Belgium”. Entities subject to it must comply with this new requirement.

Footnotes

1. Law of December 9, 2020 on various tax and anti-fraud provisions, DOC 55 1683/002, 11-12.

2. that is to say national register number or social security number.

3. These are platforms meeting certain criteria and having obtained a qualification as such by the Belgian government with regard to the tax treatment of income in what is called “the sharing economy”.

4. COM (2020) 314: proposal for a COUNCIL DIRECTIVE amending Directive 2011/16 / EU on administrative cooperation in the field of taxation.

5. https://www.const-court.be/public/n/2020/2020-155n.pdf.

6. Directive 2000/31 / EC of June 8, 2000.

Originally published Tuesday, February 02, 2021

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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