Small internet marketplaces have difficulty passing on information to the tax authorities about the turnover of their users, which they are obliged to do. Reporting proves to be technically difficult for these platforms, or they may not even know that this obligation applies to them.
This month, trading platforms must report the earnings of their users from 2024 to the tax authorities. This obligation arises from the European DAC7 directive, which came into effect on January 1, 2023. All platforms with Dutch providers must report, but the Tax Authorities notice that the smaller ones are failing.
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For small platforms, the reporting obligation is heavy. “It took a ridiculous amount of time to find out what information we should collect and how and when we should provide it,” says Pepijn Niesten of Booka Rentals. This offers special holiday homes, such as lighthouses and tree houses. In addition to Niesten, one software developer works for the company. He has had “months” of work on the reporting obligation.
Caravandelen.nl, a platform on which private individuals rent out caravans when they are not using them themselves, was not aware of the reporting obligation in the first place. This is what owner and sole employee Arno Brokelman says NRC asks for it. He believes that government information about the duty is inadequate. “They send a hundred thousand surveys that you are obliged to complete, otherwise you will be punished. But informing entrepreneurs about their obligations, whatever.”
There are many small platform companies in the Netherlands: more than half employ one person, reports statistics agency CBS. There are no precise data on the number of platform companies. A global count, statistics agency CBS, arrived at approximately five thousand companies.
Difficult to deliver
The main pain point for small platforms is the way in which they have to send the data to the tax authorities. The tax authorities themselves do not have a portal through which entrepreneurs can submit reports. Platform companies can only do this by building a ‘gateway’ in their own software that communicates directly with the tax authorities’ computer systems.
“You need quite advanced software for that,” says Hans Rennings of tax consultancy firm Deloitte. “It would be good for small and medium-sized businesses if they could submit reports more easily.”
The Tax Authorities also see that the struggle with reporting by small platforms is partly due to the “complexity and costs” of the delivery method. He is now working on a simpler system.
“Quite late,” says Niesten of Booka Rentals. “The deadline to report on 2024 is already the end of this month.” Niesten has now switched to a service provider with its own access point. “There you pay 1,300 to 1,800 euros to upload a file. That’s madness.”
Complex rules
Due to the complexity of the reporting rules, it is sometimes unclear to whom they apply. Niesten must comply with it just as much as a multi-million company such as Airbnb. But Facebook Marketplace doesn’t have to, because that service only connects buyers and sellers. They arrange their payments among themselves. Facebook plays no role in this; This is a requirement in order to be able to report how much money is traded via a platform.
Brokelman of Caravandelen.nl does not think the rules are very clear: “You can interpret them in different ways.” He is not convinced that the directive applies to him. “They should just call me and I will send them what they want.”
The directive affects more companies than many expected, says Rennings of Deloitte. “Parties have to invest quite a bit to meet the obligations, while you may wonder whether this will yield a lot for small platforms.”
“I would never start this again,” Niesten says about his company. “Far too many laws and regulations have been added.”
Unrest among sellers
Large platforms such as Vinted and Marktplaats can more easily comply with the reporting obligation because they employ more people. However, they notice a lot of confusion among their users. There is a threshold for the sale of second-hand items: platforms only have to report on users who generate at least 2,000 euros in turnover in a year or sell something at least 30 times. This threshold does not apply to the rental of real estate and vehicles and to the provision of services. In that case, everything must be reported.
To report on sellers, a platform needs their social security numbers. However, people do not simply want to fill in that BSN. “They get nervous because they think they have to pay taxes,” says Vinted director Adam Jay. “But there is no tax on second-hand sales.”
The reporting obligation is completely separate from the question of whether or not tax is levied. Taxes only have to be paid on second-hand items sold if there is a profit motive. Jay: “Only a tiny fraction of our users make a profit and actually have to pay taxes.”
Vinted is critical of the way the threshold works. This is mainly achieved by Vinted users because they sell more than thirty products, not because the value exceeds 2,000 euros. “They are usually very low value items,” says Jay. “These rules do not reflect practice at a company like Vinted.”
Marktplaats also advocates increasing the reporting thresholds or even completely excluding second-hand trade by private individuals, in order to better align with “the reality of the circular economy”. Although the sales site does not provide hard figures, it sees that some users are “reluctant” to sell via platforms because they do not understand the consequences of the reporting.