The European Commission proposes automatic exchange of income data from platform work
Platforms outside the EU will also be subject to income data exchange.
Dr. S-W – 09/2020
The European Commission is working on an
amendment to the 2011/16/EU Directive, which regulates cooperation between
national administrations in the field of tax law. This Directive provides,
interali, for the automatic exchange of data on income from employment,
pensions and real estate. However, since
the Directive came into force, the social and economic environment has changed
fundamentally as a result of the digital penetration. In particular, the
digital platform economy makes it difficult to track and detect taxable
transactions especially because they often take place across borders. As a
result, tax authorities often lack knowledge of income generated via platforms
through the sale of goods or the provision of services. Previous consultations
have also confirmed the impression of "under-reporting". With the
objective of fair taxation, the Commission is now taking steps to extend
cooperation tax authority co-operation with a proposal for a Directive amending
the 2011/16/EU Directive, COM(2020) 314 final version of 15. 7. 2020. The
proposal builds on strategies of the OECD.
A harmonised framework for an EU-wide
reporting system should ensure access of tax authorities to all relevant
income, even if the platform operator is based outside the EU. To this end,
each Member State will establish or make available a "one-stop shop for
registration and reporting". The platform operator will only have to
supply to one of these bodies, which then forwards the data to the competent
authorities. As a result, double reporting will be avoided and the bureaucratic
work of the platforms is minimised. Platform operators from a third country
must also register in an EU country (of their choice). Platform users, who
generate potentially taxable income through this platform will be identified by
their address (main residence in the EU), their tax or VAT identification
number.
The Commission estimates the one-off costs
incurred by all parties involved (public authorities, platforms) as a result of
the introduction at several hundred million euros, and the running costs at
tens of millions of euros per year.
It should be possible to use the data
obtained not only for the purposes of direct taxation but also for indirect
(value added) taxation. However, use for social security purposes is explicitly
excluded. According to Article 2, the Directive did not apply from the outset
to compulsory social security contributions because of the chosen legal bases
alone (Articles 113 and 115 Treaty on the Functioning of the European Union
(TFEU)). This will not be changed by the proposed amendment. However, the
Commission’s proposal points in the right direction: subjecting electronic
platforms to mandatory transmission of income data of platform workers. Above
all, the project makes it apparent that the well-known obstacles to mandatory
reporting by platforms, based in a non-European country, are not
insurmountable. It is hoped that Expert
proposals for the establishment of a "Digital Single Window" will
be pursued. This common digital reporting system was explicitly designed to
enforce social security obligations.