Germany: Compliance Obligations for E-Commerce Platforms as of 1 January 2023
New Compliance Obligations as of 1 January 2023
With effect as of 2023, Germany introduced the Platform Tax Transparency Act (PTTA) that implements the European Union's DAC 7 directive into German law. The law obliges platform operators to comply with certain compliance requirements as from the year 2023. A significant number of businesses will be surprised to learn that this law affects them.
This applies to all sorts of e-commerce platforms. E-commerce platforms will be forced in the future to collect data and to file such data with the German tax authorities.
The Law Covers a Wide Range of Business Transactions
The law covers a vast range of business transactions. It covers not only traditional e-commerce platforms which allow consumers to buy goods. Any digital system that enables users to contact each other and to conclude certain legal transactions may be affected. These legal transactions comprised by the law include the temporary use of immovable property and vehicles but also any personal services and the sale of goods. This is not limited to B2C transactions but also covers B2B business relations.
Consequently, the PTTA may apply to a vast range of businesses providing digital brokerage of services and sales of physical goods. The sales of goods include for example, B2B procurement platforms that are frequently used for just-in-time production, e.g., in the automotive, robotics or technology sector. Personal services comprise services that are individually rendered to clients. This may include platforms that offer transports, logistic services, deliveries, craft activities, teaching activities, text design, data processing, office, legal or accounting activities, care, translation services and many more. The business model of some fintechs and insurtechs may be affected either. Moreover, platforms that allow users to trade crypto assets or NFTs, as well as online game providers that allow players to trade virtual items, should check whether they are affected.
Even platforms that are used to procure or distribute services or products merely within a group of companies may be obliged to comply with the PTTA. Besides, platform operators may be obliged by the German law even if they are not resident in Germany or the European Union.
Registration and Notification Obligations
Companies within the scope of the law must comply with several obligations. Inter alia, they must immediately register with the German tax authorities, they must collect, record, verify, report and store specific information on their users and transactions that they support. This must be done in a timely manner so that may companies concerned should start with it right now if they have not yet done so. Moreover, under certain circumstances the platform operators are legally obliged to exclude non-complying users from the use of the platform or freeze the user's revenue.
Companies affected by the PTTA should set up an effective compliance management system. They should also adjust the contractual relationships with their users and ensure that they are allowed to collect and process the relevant data and to take appropriate actions against non-complying users.