DAC7

BB_BresciaBrickolage

Hi, I wanted to ask if Brickowl will also have to report the tax data and turnover of its users to its government (European Law DAC7). Thank you

Lawrence

Yes, we will need to file a report next year for our EU users that come under the legislation

ViksBrix

@Lawrence is adding our Tax ID the only thing we need to do as a seller to comply with DAC7? Do you need any further documentation from sellers who are registered under the 'Margin Scheme' in the EU?

Lawrence

The main thing is the information in the store settings, if you have any specific questions the best thing to do would be to reply to the DAC7 email you received.

Vosblokjes

@Lawrence
It seems that not everyone did get that mail (I did on the 23rd).
A friend of mine did not, although he has more than 30 sales

Lawrence

Only those who fall within the thresholds will be notified. From memory it's EU stores with 30 sales and 2000 EUR of turnover.

Vosblokjes

I thought it was 30 sales or €2000 (not and)

Lawrence

I will take a look at the code and see if we have it set right. It will keep sending the email every week until information is provided so relevant stores will be notified.

LeoBrick

30 Sales and/or €2000... per moth? per year? per day?

Lawrence

That's per year

Malnaborg

Is this something we have to do ?

Lawrence

You will receive an email if there is any action you need to take

Malnaborg

But I have no idea what my tax id should be ?
Or how I apply the tax profile already made ?

Lawrence

You don't need to take any actions for the DAC7, your store details are up to date. However, it looks like you have entered a made up VAT ID, you would need to remove that. if you do not have a VAT ID, you do not need to enter any VAT ID in your tax settings.

Malnaborg

I have just been "cheated" with my shipping because of this. A new customer paying without tax leaving me to lose out on a portion of the price. 32 dkk, instead of 40 dkk.

Is this because I did not fill in a tax number in my shop profile ?

I am so confused right now as to how the buyer could pay so low, without a warning to me.

Lawrence

That would be controlled by your tax profile. If you do not have a VAT number, you should not have a 25% danish tax profile. This is not caused by DAC7

Malnaborg

Well then how do i get buyers to pay my normal amount, with tax ?

Lawrence

If you do not have a VAT number, you do not need a tax profile to charge VAT

Neiljones

Can someone please explain exactly what this dac7 is because I have tried to look it up online and it is totally confusing. The way I see it is that I am unpaid vat collector for the eu. If that’s the case then maybe I should be billing the eu for my time as a tax collector.

Lawrence

DAC7 does not apply to the UK

Neiljones

@ Lawrence thanks for that was a little bit worried about it.

Leftoverbricks

I've closed my store because I'm tired of filling in CN22 forms for buyers from the UK who order € 2 worth of parts. Most of my foreign customers were from the UK but after Brexit fulfilling those orders became a PITA.

I foresee that with the implementation of DAC7 this only gets worse. Because as a private seller you now have to be afraid that you will be assessed by the tax authorities for your private sales.

Being a seller on platforms like BO and BL (or Vinted, Etsy and so on) also means that you have to hire an accountant to get everything sorted out. This takes away all your profit and fun from selling LEGO parts as a hobby.

In my opinion the outcome will be that only large companies can or will comply to the new rules. Private sellers will leave the market. This is bad for people who only want to buy a couple of bricks. Also bad for platforms like BO and BL - they not only will loose thousands of sellers but also the justification of their business model.

Thoughts?

Hoddie

Profit - or earned income - is taxable in most countries. DAC7 is simply the latest attempt to ensure marketplace sellers are correctly declaring their earned income from all sources.

Leftoverbricks

The difference, however, is that until 2023 this type of income was not taxed and now it is. Almost everyone sells something via Craigslist or your local version at some point and certainly does not report that income to the tax authorities.
With DAC7 I see an attempt by the government to get a grip on what you sell privately and that worries me as a citizen living in a free democratic capitalist society. This is similar to the way the Chinese government deals with citizen initiatives and I don't like it.
But I realize that my concerns are not widely shared. A matter of age I think. I am 62 and have been self-employed since 1989. I've seen better times!

Hoddie

As a former tax officer I can offer some explanation.

Imagine two paintings that you bought for £10 that you hung on your wall (or hid in the attic) for 2 years, and that you later sell for £5,000. That £4,990 profit is a capital gain and may be subject to capital gains tax depending on thresholds and exemptions.

But if, as an individual, you decide to trade in paintings (actively buying with the intent to sell), even if you only ever buy those two paintings, that £4,990 is earned income and subject to income tax the same as employment income, pensions, etc.

Replace 'paintings' with 'Lego' and it's easy to see which category most BO/BL sellers fall into.

(1) When buying that Lego set, did you do so with the intent to sell it (or part of it)?
(a) no - go to (2)
(b) yes - go to (3)

(2) When you later do decide to sell it (or part of it), are you making a profit?
(a) no - no tax due.
(b) yes - go to (4)

(3) You're engaging in a trade. Any profit you make is considered earned income and taxable. Whether or not you pay tax depends on your total income. Some countries allow you to earn a small annual amount before you need to declare it.

(4) Do you regularly purchase Lego sets and end up selling them? Is there a pattern to your purchasing/selling behaviour?
(a) no - capital gains tax may be due, but high thresholds usually mean it's not.
(b) yes - intent is difficult to prove, so the tax authorities may rule that you're engaging in a trade even if you believe and tell them that you're just selling your own goods. If so, (3) would apply. If not, (4)(a) would apply.

99.99% of BO/BL sellers are engaging in a trade. Extrapolate that across Ebay, Etsy, Cardmarket and every other marketplace, that's a huge - and growing - hidden economy.

The above is from a European perspective, and it may be different in the US and other countries.