EU Marketplace Seller Taxation Changes – What ASEAN Businesses Need To Know

Conducting cross-border trade is one of the biggest challenges of running an online marketplace.

If you have international buyers and sellers, making sure your company is complying with legislation can be a bit of a challenge.

Recent changes around taxation on EU sellers on digital marketplaces is one of those challenges.  If you have a digital marketplace in ASEAN you might think it does not affect you. But if you have EU sellers on your platform, it is something you need to be aware of.

Let’s take a look at the latest changes.

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Marketplace Seller Taxation In The EU – What has changed?

The new Platform Tax Transparency Act (also known by the catchier name of DAC 7) came into force on the 1st January 2023.

This act now requires online marketplaces to report sales proceeds made by European users on their platforms. 

What Does This Mean?

But there is more to this than reporting sales proceeds made by users from EU countries.

Not only do online marketplaces now have to report sales proceeds. They also have to provide supplementary information. User information such as the seller’s name, date of birth, address, bank details and tax ID form part of the report. 

These details also must be sent to the EU territory where the user lives, rather than the territory where the platform is. So, for example, Amazon will not be reporting these details for one of their office locations. They will have to report sales details in the country where their users live.

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That Sounds Scary! What Does It Mean For ASEAN Marketplaces?

It could be scary. But it depends on your business. It also depends on how many transactions EU sellers conduct on your platform.

The upside to this is that not every platform is liable. Private sales on marketplaces qualify when they hit 30 transactions per year. Or when they generate over 2000 Euros in value.

So for most marketplaces in ASEAN this may not be an issue. But, for example, an EU seller on Shopee might be selling high value items. For instance, this seller could be selling electronics to expats in Thailand. If a French national buys something worth 2100 Euros from an EU seller in France then Shopee will become liable for reporting the seller’s details.

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Marketplace Seller Taxation In The EU – This Is Happening Now??

The new rules are in effect right now. But there has been a delay in implementing the new rules in some territories. In fact, over half of EU member states did not make the deadline set to put these rules in place in their national laws. These countries include:

  • Belgium
  • Germany
  • Croatia
  • Cyprus
  • Estonia
  • Greece,
  • Italy
  • Latvia
  • Lithuania 
  • Luxembourg
  • Poland
  • Portugal
  • Romania
  • Slovenia
  • Spain

For these countries, the deadline moved by two months. Meaning that the new deadline comes into force on 1st March 2023, the very week you are reading this article!

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Marketplace Seller Taxation In The EU – Does This Cover B2B & Other Transaction Types?

DAC 7 covers all transaction types on online marketplaces. So if you are a B2B firm with an online marketplace with sellers from the EU, this will affect you.

It covers goods, services and even covers gig and sharing economy transactions. This is another impact that could affect ASEAN based platforms. EU digital nomads working in Thailand, for example, would fall under DAC 7. If they are selling their services on online platforms within Thailand. So if you own an online platform which offers these services in ASEAN, you would have to report these EU users.

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What Does This Mean For ASEAN Property Marketplaces?

One industry that may feel the effects of this more than others in ASEAN is property. A property marketplace selling condos owned by EU nationals would fall under these rules. Any such marketplace would need to report seller data to the EU. As all transactions would be over the 2000 Euro threshold.

AirBnB style rentals will also fall under DAC 7. If an EU national rents a condo for 2001 Euros to anyone, that seller would have to be reported under DAC 7. It is very likely that these marketplaces also conduct more than 30 transactions per year that involve EU sellers. So platforms offering holiday rentals or condo sales should be proactive in their approach to the new rules.

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Marketplace Seller Taxation In The EU – When Is The First Report Due?

The good news is that if these changes affect you, you have time to prepare.

The new DAC 7 rules are now in force and have been since the 1st January 2023. But annual reports are required by the end of the first month after the reporting year. So if these changes affect your business, your first report is not due until 31st January 2024.

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If you need help building a marketplace that enables seamless cross-border commerce and stays compliant with local legislation, talk to MAQE. We have been building commerce platforms for a long time, so get in touch via [email protected]