Digital selling regulations to be simplified and implemented shortly in Latvia
In an effort to enhance transparency and streamline processes within the digital economy, the European Union (EU) has introduced the DAC8 regulation, an amendment to the EU Council Directive on administrative cooperation in taxation. Here are some key changes:
**1. Simplified Seller Identification:** The DAC8 regulation introduces a standardized method for verifying the identity and residence of sellers. Reporting platform operators can now utilise identification services developed by the EU or member states to streamline the process and reduce the amount of information required from sellers. The basic information needed includes the seller's name, identification number, and the issuing authority, which is made available directly through the member state's identification service [1].
**2. Enhanced Data Exchange:** DAC8 promotes a harmonized approach to automatic information exchange across the EU, ensuring that data quality and security standards are maintained. The procedure for removing reporting platform operators from the European Commission’s central register is now more streamlined, allowing requests to be made through national authorities like the State Revenue Service [1].
**3. Due Diligence and Reporting:** Specific due diligence procedures and reporting requirements have been introduced for crypto-asset service providers. They must collect and verify information from EU clients and report this to competent authorities, which then exchange it with other EU member states. Failure to comply with these new reporting obligations could result in penalties of up to EUR 14,000 [2].
Under DAC8, a unique identifier will be communicated to the digital platform from the member state's information system. This identifier will be used by the platform operator to report to the national tax authority without collecting any additional tax-related information about the seller. The national tax authority system will generate this unique identifier for the seller or service provider [3].
These updates aim to facilitate a harmonized approach to automatic information exchange across the EU, reduce the burden on operators using the new identification service, and align reporting requirements across the EU, ultimately enhancing transparency and reducing administrative burdens in the digital economy.
[1] European Commission, "DAC 8: Amendments to the EU Council Directive on Administrative Cooperation in the field of Taxation (DAC 7)," 2021. [2] European Parliament, "Proposal for a Council Directive on administrative cooperation in the field of taxation (DAC 8)," 2021. [3] European Commission, "DAC 8: Simplified reporting for reporting platform operators," 2021.
The European Union (EU) regulation DAC8, in the realm of digital economy, promotes the utilization of technology for simplified seller identification, allowing platform operators to use EU-developed identification services to streamline the process. Meanwhile, within the financial sector, DAC8 enforces due diligence and reporting rules for crypto-asset service providers, necessitating the collection and verification of information from EU clients.
