DAC7 directive for holiday rental hosts

December 2023

The recent implementation of DAC7, derived from the European Union Directive on Administrative Cooperation, Amendment 7, has had a significant impact on the short-term holiday rentals sector in Europe. As of January 1, 2023, platforms like Airbnb are required to comply with the provisions of DAC7, a regulatory framework designed to promote transparency and collaboration among EU member states. In this article, we’ll run you through everything you need to know about this new regulation.

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What is DAC7, and how does it affect holiday rentals?

DAC7 facilitates the efficient exchange of tax information among European Union countries. It focuses on the tax declaration of individuals and businesses involved in intermediary platforms, particularly short-term holiday accommodations. It’s essential to note that DAC7 isn’t limited solely to this type of rental but encompasses any form of leasing, including long-term rentals.

Recognised platforms like Airbnb or Holidu must adhere to the established provisions, sharing details of the hosts.

Operators’ responsibility and adaptation for hosts

In this context, the responsibility for providing tax information to EU authorities falls directly on platform operators like Airbnb or Holidu. For hosts using these platforms, it’s crucial to understand DAC7 provisions and adapt effectively to this new regulatory framework to ensure compliance and avoid legal issues.

Platforms subject to DAC7: How to identify them?

Digital platforms play a crucial role in facilitating transactions across various industries, and the implementation of DAC7 focuses on those involved in the holiday rental industry. Here’s how to identify if a specific platform is subject to DAC7:

Which platforms fall under the scope of DAC7?

• Platform definition: According to DAC7, a platform refers to a computer program facilitating transactions between sellers and buyers. In the context of holiday rentals, this involves facilitating transactions between hosts and guests.
• Transaction location: It’s crucial to determine where transactions take place. If a host advertises on a website but transactions occur outside this medium, the platform might not be considered subject to DAC7.
• Payment processing: DAC7 specifically applies to platforms where hosts buy or rent properties and process payments through the same platform. This aspect is key to determining if a platform meets the established criteria.

Identifying platforms subject to DAC7:

To determine if a specific platform is subject to DAC7, consider the transaction sequence and payment processing:

• Advertisements and transactions on the same platform: Check if the platform allows hosts to post ads and conduct transactions within its environment.
• Internal payment processing: Identify if the platform facilitates internal payment processing, meaning payments are made through the same platform.
• DAC7 compliance: If a platform meets both criteria above, it falls under the DAC7 definition and must follow the established provisions.

What data is shared according to the published ad?

To determine if the platform’s obligation to share data applies to your ad, it’s essential to consider the property’s location and your primary residence.

Property location:

• If your property is located within one of the 27 EU member states, the obligation to share data is activated.
• DAC7 directly affects transactions within the European Union, and both Holidu and Airbnb, along with other platforms, must comply with the provisions to ensure fiscal transparency.

Residence in an EU member state:

• If you reside in one of the EU member states, your ad data will be shared with the corresponding country or countries.
• The regulation aims to strengthen administrative cooperation, ensuring efficient fiscal information exchange among member countries.

Tax Identification Number (TIN) in a country different from the main residence:

• If you have a Tax Identification Number (TIN) in a country other than your main residence, the information may be shared with the tax authority of that country.
• DAC7 specifically addresses the need for cross-border fiscal information exchange to prevent tax evasion.

It’s crucial to understand these conditions to ensure compliance with the obligations established by DAC7. Transparency in data exchange contributes to strengthening fiscal integrity in the European Union.

What does this mean for hosts?

For hosts, this obligation to share data implies:

• Regulatory compliance: Ensure that the tax information associated with the ad is up-to-date and accurate, especially regarding the property’s location and primary residence.
• Cooperation with tax authorities: Actively collaborate with tax authorities to ensure efficient information exchange and comply with DAC7 requirements.
• Awareness of tax implications: Understand the tax implications of owning holiday rental properties in the EU and how DAC7 affects fiscal transparency and collaboration.

The platforms’ obligation to share data has significant ramifications for hosts, and understanding the criteria that trigger this obligation is essential to comply with the fiscal regulations established by DAC7.

What data must be shared with tax authorities?

The DAC7 Directive establishes rigorous requirements for the exchange of tax information between rental platforms like Airbnb and the tax authorities of the European Union. Below, we detail the data that must be communicated:

All holiday rental hosts (residents in the EU) must provide:

Individual Data:

• Name.
• Surname.
• Main residence address.
• VAT Identification Number (if registered).
• Date of birth.
• Quarterly income and number of ads posted on platforms.
• Bank account or other payment service account.
• Account holder’s name if different from the host’s account.
• Country of residence.
• Tax Identification Number (TIN) for the residence country and each country where the host has an ad.
• Property registration number.
• Number of rented days.

Rental Data:

• Business/legal name.
• Service fees (which fees apply to their ads).
• Residence tax.
• Property registration number.

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