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Admin burden reduced for UK-resident digital sales platforms


Published: 30 Nov 2023 Update History

A European Commission regulation ensures that a UK-resident platform hosting EU-resident sellers may only need to report data to HMRC.

Reporting rules for digital platforms come into force in the UK on 1 January 2024. These rules require UK-resident digital platforms to report information to HMRC on the activities of sellers based on their platforms, with the first reports due by 31 January 2025.  

The goods and services, known as relevant activities, covered by the reporting requirement include rental of immovable property (such as accommodation), rental of a means of transport, personal services, and the sale of tangible goods. HMRC will share the information with the tax authority for the jurisdiction in which the seller is resident.  

An extension of EU tax transparency rules (known as DAC 7) also places a requirement on platform operators to collect, verify and report specific information with respect to reportable sellers that have undertaken relevant activities through their platforms. These rules apply from 1 January 2023 and include an obligation for digital platforms to provide information about the income of sellers who are located, or whose rental property is located, in the EU. This reporting obligation applies regardless of whether the platform is based in the EU. DAC 7 therefore potentially creates obligations for some UK platforms with EU-based sellers. 

However, DAC 7 contains a provision to prevent double reporting by platforms that are both within its scope and that of the UK reporting rules. As a result of the Commission's implementing decision, UK platforms that fall within the DAC 7 rules can report directly to HMRC under the model rules, rather than reporting to an EU Member State under DAC 7. This is subject to the condition that the EU member state concerned had signed up to exchange of information with the UK under the OECD rules. HMRC will then exchange the information with the tax authority in the relevant EU Member State. 

However, as DAC 7 came into force one year earlier than the UK rules, platforms will still need to report on transactions that EU resident sellers carried out between 1 January and 31 December 2023 to the relevant EU jurisdiction.  

In all cases, platform operators are encouraged to consult the relevant legislation and/or guidance in the other jurisdiction to confirm whether it is still necessary to report in those jurisdictions. 

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