Ina Ree­se Tax & Legal Prac­ti­ce – Flens­burg | Harrislee

Platform revenues: Germany extends automatic data exchange to third countries

Ger­ma­ny is exten­ding the auto­ma­tic exch­an­ge of data on plat­form inco­me to third count­ries. What this means for taxpayers. 
Platform revenues: Germany extends automatic data exchange to third countries

Platform revenues: Germany extends automatic data exchange to third countries

Anyo­ne who ear­ns money via digi­tal plat­forms – whe­ther as a land­lord on a boo­king plat­form, a sel­ler on an online mar­ket­place or a free­lan­cer on a job-matching site – has long been the focus of the tax aut­ho­ri­ties. The Ger­man govern­ment is now plan­ning to extend the auto­ma­tic exch­an­ge of infor­ma­ti­on on such inco­me to include fur­ther count­ries out­side the EU. A draft bill to this effect has been tabled.

What’s behind it?

Within the Euro­pean Uni­on, tax aut­ho­ri­ties have been auto­ma­ti­cal­ly exchan­ging data on inco­me gene­ra­ted via online plat­forms for some time now. This is based on the so-cal­led EU Mutu­al Assis­tance Direc­ti­ve. So, if a plat­form such as Airbnb or eBay reports data on a sel­ler resi­dent in Ger­ma­ny to the rele­vant aut­ho­ri­ty, this infor­ma­ti­on is also pas­sed on to the Ger­man tax office.

Until now, howe­ver, this had only appli­ed in rela­ti­on to EU Mem­ber Sta­tes. The new Act is inten­ded to trans­po­se the so-cal­led Mul­ti­la­te­ral Agree­ment of 22 June 2021 into Ger­man law. Ger­ma­ny signed this agree­ment, which was deve­lo­ped under the auspi­ces of the OECD, in Novem­ber 2024. It obli­ges the par­ti­ci­pa­ting sta­tes to auto­ma­ti­cal­ly exch­an­ge tax-rele­vant infor­ma­ti­on on plat­form reve­nues with third count­ries as well.

What does this mean for platform operators and users?

Until now, plat­forms based out­side the EU had faced the pro­s­pect of a dou­ble bur­den: report­ing obli­ga­ti­ons in their coun­try of estab­lish­ment, cou­pled with their own regis­tra­ti­on and report­ing obli­ga­ti­ons within the EU. The new agree­ment pro­vi­des a solu­ti­on to this. If a third-coun­try plat­form ful­fils equi­va­lent report­ing obli­ga­ti­ons in its home coun­try and the­re is an effec­ti­ve sys­tem of infor­ma­ti­on exch­an­ge with EU Mem­ber Sta­tes, the requi­re­ment for dual report­ing is waived.

For tax­pay­ers in Ger­ma­ny, this means one thing abo­ve all else in prac­ti­ce: inco­me gene­ra­ted via digi­tal plat­forms is incre­asing­ly coming to the atten­ti­on of the tax aut­ho­ri­ties. In future, this will no lon­ger app­ly sole­ly to EU-rela­ted tran­sac­tions, but also to tran­sac­tions car­ri­ed out via plat­forms based in count­ries such as the United King­dom, Cana­da or other OECD mem­ber states.

Data protection is ensured

The draft bill express­ly sti­pu­la­tes that the exch­an­ge of data is sub­ject to com­pre­hen­si­ve data pro­tec­tion requi­re­ments. The infor­ma­ti­on trans­mit­ted is sent exclu­si­ve­ly to the tax aut­ho­ri­ties of the respec­ti­ve coun­try and is not published.

What should those affected bear in mind?

Anyo­ne who regu­lar­ly ear­ns inco­me via digi­tal plat­forms and has not yet declared this, or has not declared it in full, on their tax return should fol­low deve­lo­p­ments clo­se­ly. Inter­na­tio­nal aut­ho­ri­ties are coope­ra­ting ever more clo­se­ly in the detec­tion of tax eva­si­on. Anyo­ne who is unsu­re as to whe­ther and how such inco­me should be trea­ted for tax pur­po­ses should seek tax advice at an ear­ly stage to avo­id having to pay back taxes or facing cri­mi­nal tax law consequences.

The draft bill is curr­ent­ly going through the par­lia­men­ta­ry pro­cess. It can­not come into force until it has recei­ved final appr­oval from the Bundestag.

This post and the accom­pany­ing image were crea­ted with the help of AI and have been edi­to­ri­al­ly reviewed.

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