Legal opinion on application of DAC7 regulations

We advised Operator of online monetization service for Streamers in:

Legal opinion on application of DAC7 regulations to operator of online monetization service for Streamers

The subject of DLK’s legal analysis was to assess the scope of application of the obligations imposed on platform operators under the provisions of the law implementing Directive (EU) 2021/514 (DAC7).

The DAC7 Directive, followed by the Polish law implementing it, Act of May 23, 2024 (the so-called “DAC7 Law,” which came into force on July 1, 2024), impose obligations on platform operators to collect and provide the tax administration with information on sellers who have transacted through these platforms. The purpose of these regulations is to counteract the growing phenomenon of tax avoidance and evasion in the digital space, as well as ensure equal competition between sellers selling their goods and services in the traditional manner and those operating through platforms.

The DAC7 Law imposes obligations on platform operators, by which is meant entities that offer software (including a website), or applications, enabling sellers to connect with users in order to perform, directly or indirectly, a relevant activity for the benefit of those users, as well as arrangements for the collection and payment of remuneration for the relevant activity. In this regard, there is a fundamental doubt as to whether the buisness model of the Operator of an online service that enables so-called Streamers to receive payments from their viewers falls within the definition of a platform under the DAC7 Law.

Thus, the key legal problem is the correct interpretation of the term “relevant activity” (Article 75a(20) of the DAC7 Law). If a website (application/software) enables a seller to perform a “relevant activity” and collect remuneration therefrom, such website should be considered a platform within the meaning of the DAC7 Law, and the operator of such a platform will have a number of information collection and reporting obligations.

According to Article 75a(20) of the DAC7 Law, a “relevant activity” means one of the following activities performed for compensation:

1. provision of real estate, parts thereof, including appurtenant premises, or an interest in real estate,
2. a personally provided service involving time-or task-based work by an individual acting either independently or for or on behalf of an entity, performed at the user’s request online or physically offline after enabling its performance through the platform,
3. sale of goods,
4. provision of a means of transportation.

In the context of the activities of the Operator of an online monetization service for Streamers, a doubt arises as to point 2, i.e. whether the activities performed by Streamers can be qualified as personally provided services involving work performed on a task or time basis. Neither the DAC7 Law nor the DAC7 Directive give further guidance on how the above terms should be understood. The Polish legislator only indicates in the explanatory memorandum to the DAC7 Law that personally provided services include, for example, “services of passenger transportation, transportation/delivery or minor daily services, such as plumbing, construction work, hairdressing services.”

The specific functionality of the online monetization service and the services provided by Streamers through it will therefore determine whether the Operator of such a service is subject to the obligations under the DAC7 Law.

DLK’s advisory included:

• Analysis of DAC7 regulations,
• Analysis of the functionality of the online Monetization Service for Streamers and the activities (services) performed by Streamers through this service based on the T&Cs and additional information received from the Client,
• Legal evaluation of the activities of Streamers performed through the Monetization Service in terms of their qualification as “relevant activities” within the meaning of the DAC7 regulations,
• Legal opinion on the application of DAC7 regulations to the Operator of the Service and providing additional recommendations.