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General about the reporting obligation
DAC7 is an EU directive that includes a reporting obligation regarding income from the sale of personal services or goods and rental of immovable property and means of transport through digital platforms. Platform operators, i.e. companies maintaining digital platforms, must report information on any sales and services facilitated through their platforms to the Tax Administration.
If your company provides a digital platform through which other parties can sell goods and services or rent out apartments or means of transport, your company is obliged to report information on the sellers that use the platform and on the income they earn.
Digital platform
A digital platform may be software, a web site or a mobile application. It allows sellers to sell goods or services or rent out property.
The definition of “platform” is met when:
- the platform is digital and it is possible to buy goods or services or rent immovable property or means of transport through it
- the platform operator has information on the sales and rentals realised and on the consideration paid.
Platform operator
A platform operator is a company that provides a digital platform through which a sale or rental can take place. On the platform, sellers can sell goods or services and rent out immovable property or means of transport.
The platform operator can also act on behalf of a seller, for example when the platform operator receives an assignment from the buyer and buys goods or services from the seller accordingly, and the seller then delivers the goods or provides the service to the buyer.
Huomio osio alkaa
Example: Indirect sale of personal service
Company Ltd has a digital platform through which services can be bought. The buyer buys a service through the platfrom and concludes a contract on the service with Company Ltd. Company Ltd fulfills the assignment by buying the service from a seller. The seller provides the service to the buyer.
Huomio osio päättyy
Your company is not a platform operator if:
- the platform is used only for advertising or product and service presentations, to move users to another platform or only to process payments
- you sell or rent out only your own company’s products or services
- the service (such as cleaning or renovation) is carried out by your company’s own employee
- you maintain the platform as a private entrepreneur.
1. Identify the sellers and their countries of residence
Identifying the sellers and their countries of residence is part of the platform operator’s due diligence obligations. It is also a way of ensuring that the seller’s information is sent to the correct country in international information exchange.
2. Collect and verify information
Collect information on sellers and on immovable property rented out.
Annually, collect information on the following activities the seller has carried out for consideration:
- rental of immovable property, an apartment or a parking space
- rental of a means of transport (such as a car or a boat)
- personal services (such as cleaning, renovation, delivery services, hairdressing services)
- sale of goods.
Note: Report the sale of goods if either of the following conditions is met:
- the number of sale transactions during the calendar year is at least 30
- the total amount of the sales exceeds €2,000.
Verify the accuracy of the information in line with the due diligence obligations before reporting.
3. Submit the information electronically on the annual information return
Report the information on all reportable sellers, whether they reside in Finland or abroad.
The annual information return must include the following information:
- identification information of the platform operator
- information on the sellers
- information on the sales and rentals
- information on the amount of consideration.
File the annual information return in the Ilmoitin.fi service. The annual information return must be filed once a year by the end of January following the calendar year. Also file the information when there are no transactions to report for the calendar year (this in known as a nil return).
4. Store the information
Store the information you have collected on the sellers and transactions for six years after the end of the calendar year for which the return was filed.
Under the DAC7 directive, tax authorities in EU countries exchange information on income reported by platform operators.
The Finnish Tax Administration receives information from other EU countries on the income that individuals residing in Finland and companies located in Finland receive through non-Finnish platforms. Further, the Tax Administration receives information on rental income that individuals residing in other EU countries or companies located in them receive on their immovable property located in Finland.
Correspondingly, the Tax Administration sends information to other EU countries on the income that individuals residing and companies located in them receive. The information is based on annual information returns filed by platform operators reporting to Finland. If a real estate unit or other immovable property has been rented out through a platform, the information will also be sent to the country where the property is located.
The exchange of information will gradually also be expanded to non-EU countries.
Who is required to report information?
If a platform operator is domiciled in Finland, it must submit an annual information return to the Finnish Tax Administration on:
- sellers and service providers residing in Finland and other EU countries
- sellers and service providers residing in non-EU countries if Finland has agreed on the exchange of information with their countries of residence.
- individuals and companies that rent immovable property in an EU country through the plaftform. The same applies to immovable property located in a non-EU country if Finland has an agreement on information exchange with the country.
The same reporting obligation applies to any platform operator in a non-EU country that has selected Finland as its country of registration in the EU and reports the information to the Finnish Tax Administration. Read more in the instructions for non-EU platform operators: How to register in the EU
Before submitting an annual information return, you must make sure the information you have collected is accurate. For this, platform operators have certain due diligence obligations.
Due diligence obligations for platform operators
A platform operator must identify the sellers that use their platform and collect information on them.
The due diligence obligations help to ensure that
- platform operators report information on all the reportable sellers
- the information reported is accurate
- information is not reported on excluded sellers.
How to report information
A company acting as a platform operator must submit an annual information return to the Tax Administration on sales and rentals facilitated through the platform.
File the reporting platform operator’s annual information return electronically in the Ilmoitin.fi service. File the return once a year by the end of January. The filing period of the annual information return cannot be extended. Also file the information even if there are no transactions to report for the calendar year (this is known as a nil return).
The return must be filed in an XML format according to the schema published by the Tax Administration.
Technical instructions: Technical guidance on the annual information return (select “Annual information return of reporting platform operators (DAC7) (VSDPIFIN)” in the list)
Submit your company’s identification information and information on the individuals and companies that have received income through your platform during the calendar year.
Submit the following information on each reportable seller:
- name, address and tax identification numbers (TIN) – in Finland, this means a personal identity code for individuals and a Business ID for companies and organisations
- number of sale transactions and income (i.e. consideration) received by the seller, and fees, commissions and taxes collected from the seller; however, value added tax (VAT) is not reported as tax
- number of rentals and rental income, i.e. consideration paid to the seller
- information on the rented property, such as address and property identifier or Business ID of a housing company or a real estate company.
Note: If the consideration paid to the seller can be established by reasonable means, it must also be reported even if it has not been paid through the platform. In these cases, it is enough to report the price stated by the seller on the platform, for example.
First make sure that you have collected all the reportable information
- collect all the information required by law on the sellers (see “What information must be reported on the annual information return”).
- verify that the information is accurate (see “Due diligence obligations for platform operators”).
Your own software partner, developer or accountant
You can ask for help from your own software partner, IT developer or accounting firm. The accounting firm may be using software that allows them to generate the annual information return in the required XML format. Further, the platform developer may be able to generate the return directly in the required format.
The Tax Administration’s IT developer services
The Tax Administration provides technical documentation and a test service (https://testi.ilmoitin.fi/) to help you make sure the annual information return is technically correct.
If you need more help, contact us by email: Alustapalveluraportointi.DAC7(at)vero.fi. You can ask us about the schema, file structure and reporting obligation, for example.
A platform operator does not need to file an annual information return if it demonstrates to the Tax Administration annually in advance that its platform is not used by any reportable sellers. In other words, all the sellers using the platform are excluded sellers.
The demonstration must be submitted before the end of the reportable year and must contain a sufficiently detailed description of the business model. Another alternative is to file the annual information return as a nil return if there is nothing to report.
Excluded platform operators – how to submit a confirmation to the Tax Administration
Notify your sellers
A platform operator must provide each reportable seller with the same information it reports on the seller to the Tax Administration.
The information must be provided for the seller by the end of January, i.e. on the same schedule as the annual information return is submitted to the Tax Administration.
If you file late
The filing period of the annual information return cannot be extended. If you do not file the return or if you file the information late, the Tax Administration can impose a negligence penalty. Read more: Negligence penalty for a third-party filer (detailed guidance)
Making corrections
If you notice an error in an annual information return you have submitted, correct it as soon as possible. Correct the information by submitting an XML correction message in the Ilmoitin.fi service. Submit a correction only on the sellers whose reported information is inaccurate or incorrect.
Store the reported information for six years after the end of the calendar year. Information filed on an annual information return can be corrected for five years after the end of the reportable period. However, inaccurate information must be corrected as soon as possible after the error has been detected.
Read the instructions on making corrections in chapter 5 of the technical guidance: Technical guidance on the annual information return (select “Annual information return of reporting platform operators (DAC7) (VSDPIFIN)” in the list)
Seller: selling and renting on digital platforms
When you sell goods or services through a digital platform, the platform provider must collect information on you and your sale transactions. The same applies to rental income that you receive when you rent out an apartment or a car, for example. The platform operator reports the information to the Tax Administration once a year.
You yourself must file a tax return where you report all the taxable income you have received through platforms – both from Finland and from abroad – and any expenses and deductions related to the income.
Selling goods and services on a digital platform: information for sellers
Legislation and instructions (OECD and EU)
Below you will find links to national legislation, the DAC7 directive and documentation published by the OECD and the EU. The documentation can be used, for example, by IT developers and other specialists applying the DAC7 regulation to practice.
Legislation
Act on the digital platform operators’ obligation to report information in the field of taxation (1267/2022), Finlex (available in Finnish and Swedish, link to Finnish)
EU documentation
DAC7 – Taxation and Customs Union; on the EU Commission’s website, you will find the DAC7 directive, its implementing provisions, and current information
OECD documentation
Model Reporting Rules for Digital Platforms; on this site, you will find the OECD’s model reporting rules, the international information exchange framework, XML schemas, FAQ and other current information published by the OECD on platform economy reporting.
OECD’s TIN portal; information on different countries’ TIN systems in international information exchange.
If you need assistance in preparing XML data or applying the schema, please send email to: Alustapalveluraportointi.DAC7(at)vero.fi.
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Detailed guidance
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