Without a doubt, digital platforms are one of the biggest digital disruptions in the world of work in recent years and are being exponentially empowered by the ongoing pandemic.

They have the potential to positively impact 540 million individuals in the world and increase revenues by $2.7 trillion by 2025^[1].

But many times, due to their characteristics, they hinder the traceability and detection of taxable events by the Tax Administrations (TAs) and in this way lead not only to deficits in tax revenues, but also violate equity and equality with those activities that market or provide services by traditional means.

As a result, several jurisdictions have already introduced information measures that require platform operators to communicate to the TAs the income received by sellers or service providers, while others plan to introduce similar measures in the near future.

Therefore, the objective of this paper is to comment on various regulatory frameworks linked to the topic, recent agreements sealed by TAs and share some final ideas.

1. Model rules for digital platforms to report operations. (OECD)

On July 3, 2020, the OECD published the document entitled “Model Rules for Reporting by Platform operators with respect to Sellers in the sharing and gig economy”^[2], which aims to help taxpayers comply with their tax obligations, avoid the proliferation of different and unilateral reporting regimes and also allow the use of novel ICT solutions, helping to create a sustainable environment that supports the growth of the digital economy.

In general terms, the document is centralized in 3 aspects:

• Transactions to be reported, with special attention to accommodation, transportation and other personal services.
• A wide range of platform operators and vendors, to ensure that as many relevant transactions as possible are reported.
• Due diligence and reporting rules that ensure accurate information is reported without imposing overly burdensome procedures on platform operators.

With regard to reporting entities, a broad and generic definition of the term platform has been chosen to cover all software products that can be accessed by users.

In relation to the operations for which the information must be reported, it is clarified that both the rental of real estate, and the provision of personal services, including transportation and delivery services are included.

On June 22, 2021, the OECD published another document entitled “Model Reporting Rules for Digital Platforms: International Exchange Framework and Optional Module for Sale of Goods”^[3], which echoing the interest of a number of jurisdictions allows the extension of the scope of the Model Rules to the sale of goods and the rental of means of transport.

That is, the OECD developed an optional module, which allows these jurisdictions to implement the Model Rules with greater scope. Exchanges of information under the Model Rules will be carried out by an international legal framework in the form of the Multilateral Competent Authority Agreement.

2. European Union Directive DAC 7

Administrative cooperation between the competent authorities of the EU Member States helps to ensure that all taxpayers pay their fair share of the tax burden, regardless of where they work, retire, have a bank account and invest or do business.

This is based on Council Directive 2011/16/ EU, which sets out all the necessary procedures and provides the structure for a secure platform for cooperation.

The agreed proposal on administrative cooperation^[4] DAC7 will ensure that Member States automatically exchange information on revenues generated from sales on digital platforms, whether or not the platform is located in the EU.

DAC 7 determines the establishment of a new exchange of information between Member States, focusing on the information obtained from operators of digital platforms, which must transfer to the TAs some specific information relating to the economic activities in which they mediate, putting in contact the sellers of goods or providers of certain services, called “sellers”, and the users of said platforms.

Then, the TA receiving said information must provide it to the TA of the seller’s state of residence and, in the case of the lease of real estate, in addition, to the TA where the real estate is located.

This administrative cooperation involves the imposition of due diligence obligations, registration (census) obligations and reporting obligations on digital platforms operators.

Many TAs are working towards the transposition of this (EU) 2021/514 Directive. Thus, the AEAT of Spain reflects this in its strategic plan, saying that said transposition will be conducted in the financial year 2022.

The deadline for having all the necessary standard to comply with the Directive is 1 of January 2023. The Directive will apply from January 2023.

The first submissions of the annual information statement in respect of the operations of the digital platforms shall take place in January 2024 in respect of information relating to the financial year 2023.

3. Spain’s recent AEAT agreements with AMAZON and E-BAY

Recently, it became known that Amazon Spain will share with the AEAT information of the sellers that operate in their online store^[5].

This is the first agreement signed by the state agency with an e-commerce company, which operates a marketplace, although they are negotiating with other companies.

The agreement is in line with the guidelines of the AEAT Tax and Customs Control Plan of 2022, which gives importance to obtaining information related to the new models of economic activity, in particular, those derived from electronic commerce.

Amazon undertakes to share information quarterly with the AEAT through a secure transmission, and to this end, they will enable a communication channel through their electronic headquarters, which will require the use of a valid means of identification.

The agreement makes it clear that the assignment of information carried out by Amazon will have as its sole purpose the fulfillment of the functions attributed to the AEAT by mandatory rules.

All the information provided “within the legal limits” will be treated confidentially, respecting the regulations on professional secrecy, the protection of personal data, business secrecy and the General Tax Law.

Among the data that Amazon will make available are the legal name of the seller; the VAT registration number in Spain or, failing that, the identification number in the EU, or any other tax identification number provided by the seller; the registered office address; the registered email address; the total number of units sent to customers resident or established in Spain through Amazon.es; percentage of units delivered from warehouses located in Spain (when this data is available); average sales price per unit in euros, and identification of the place from which the sale takes place (warehouse located in Spain, EU, or third countries).

To implement the agreement, which will have a duration of one year (although tacitly it will be extended for periods of equal duration), the AEAT and Amazon will form a joint commission composed of four representative members.

A similar agreement was also reached with E-bay, which will share information with AEAT and promote compliance with VAT and other indirect taxes by online sellers.^[6]

These agreements are similar to the one sealed in the UK by HM Revenue & Customs in 2018. In this case, seven marketplaces signed up: Amazon, eBay, Fruugo.com, Worf & Badger, Etsy Ireland, Asos and Flubit.

Final thoughts:

I consider important the initiatives of the OECD and the EU that seek to establish a new set of rules for the presentation of tax information through digital platforms, considering their relevance today and their potential growth.

I also stress the importance of agreements such as those of Amazon and E-bay with the AEAT of Spain and those of the United Kingdom. They seem relevant to me because they will improve the tax compliance of the subjects who use these platforms.

TAs will need to step up international cooperation in order to be able to manage more efficiently the information related to taxpayers who conduct operations through these new business models.

An example  of this is the Digital VAT kit, launched to apply this tax to e-commerce in Latin America and the Caribbean.^[7]

Another important measure is proposed by CIAT – Norad of Digital Compliance Economy, regarding the management of VAT within the digital economy, to require companies that voluntarily adhere to the mechanism, to collect in their transactions the corresponding indirect taxes in B2C type operations (with consumers) and make the corresponding transfer of funds, as a simplified mechanism for registration, declaration and provision of information.^[8]

The prominent role of these platforms within the supply chain puts them in an ideal position to become recipients of new tax obligations, not only of information but also as agents for collecting their users’ taxes.

On the taxpayer side of digital platforms, the main advantage will be the simplification and standardisation of information regimes.

From the point of view of the TAs, it is vital to have the information of the operations conducted through digital platforms, in order to identify all the actors involved and their operations and thus determine the taxable events taxed, and subject them to taxation in each of the countries involved.

This becomes urgent, especially in a crisis situation such as the current one where resources are urgently  needed, and it is also urgent to “level the playing field” for a matter of equity and equality with those activities that market or provide services by traditional means.

From the point of view of social security, information can help to ensure that digital platform workers have adequate social protection, since social protection systems are currently at the crossroads of how these new contracts should be taxed, which can also lead to funding problems and further to funding of our pension systems^[9].

The information exchanged can also help detect and combat other non-tax aspects of crimes, such as drug trafficking, money laundering and corruption and can also be used to better understand these new businesses and thus be able to implement control plans suitable for the sectors involved or also new approaches of cooperative/collaborative compliance with the owners of the digital platforms, thus granting greater legal security and certainty to the parties involved.

In short, I understand that because of the importance of the issue, today more than ever, it is essential to move towards a multilateral consensus in order to accelerate the application of these information regimes.

[1] Manyika, Lund, Robinson, Valentino y Dobbs (2015). A labor market that works: connecting talent with opportunity in the digital age. McKinsey Global Institute
[2] https://www.oecd.org/tax/exchange-of-tax-information/model-rules-for-reporting-by-platform-operators-with-respect-to-sellers-in-the-sharing-and-gig-economy
[3] https://www.oecd.org/tax/exchange-of-tax-information/model-reporting-rules-for-digital-platforms-international-exchange-framework-and-optional-module-for-sale-of-goods.pdf
[4] https://ec.europa.eu/taxation_customs/business/tax-cooperation-control/administrative-cooperation/enhanced-administrative-cooperation-field-direct-taxa
[5] https://cincodias.elpais.com/cincodias/2022/02/13/companias/1644750177_564929.html
[6] https://cincodias.elpais.com/cincodias/2022/03/07/companias/1646650194_324630.html
[7] New toolkit to strengthen Value Added Taxes on e-commerce in Latin America and the Caribbean
[8] The Digital Economy, the Norwegian Cooperation and CIAT. An Essential Tool.
[9] To expand this topic, see my article Trabajadores de plataformas digitales y la imperiosa necesidad de su protección social – Dr. Alfredo Collosa

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