As we informed you in the previous year, an amendment implementing the EU DAC 7 Directive into Czech law came into force on 1 January 2023 (you can read about it HERE).
Just before the Christmas period, the Financial Administration published a document summarising the basic concepts and the most common questions related to this new obligation for digital platforms.
The questions and answers are divided into four parts:
- general questions,
- issues relating to the reporting obligations of Czech platform operators,
- issues relating to the registration obligation of non-resident platform operators,
- practical examples.
Although the document does not contain any ground-breaking information, it is clearly written and contains very practical information that confirms our ideas about the correct interpretation of the law.
In case you are interested in reading the document, you can find it HERE.
We would like to mention the two most important pieces of information that the Financial Administration has included in the document:
Vendors in the reporting countries
Under the relevant law, the affected platform operators are required to collect and maintain information on sellers who are residents of the reporting countries or sellers who provide immovable property located in the reporting countries. As the Czech Republic has not yet acceded to this document, the scope of reporting sellers is limited to EU residents and immovable property located in the EU.
Exception for operators of advertising platforms
According to the relevant law, this new obligation does not apply to so-called advertising platforms. So far, however, the question has been what the definition of an advertising platform is, or where the limit begins, where a given platform can no longer be considered an advertising platform.
In Part IV, point 2. The Financial Administration has listed 3 types of business models, including an assessment of whether or not they are subject to the reporting obligation. The conclusions of the Financial Administration show that if an order is placed on the platform, then the reporting obligation will apply to this platform. It is therefore irrelevant whether or not the platform itself facilitates the payment.
Thus, according to our understanding, an advertising platform is a platform that allows a seller to list/offer his product, but the actual interaction (e.g. price negotiation) must already take place only between the seller and the buyer (not through the platform).
As some cases may be marginal and it may not be clear at first sight, if this is indeed an advertising platform within in the sense of the relevant law, we would recommend consulting experts on the subject of DAC 7.
Finally, we would like to point out that Czech operators of reporting platforms are obliged to file a notification by 16 January 2023.
Should you need any help with anything related to DAC 7, please do not hesitate to contact us. Our experts Petr Němec and Michal Hlaváč will be happy to assist you.
Author: Petr Němec, Michal Hlaváč