Platform Tax Transparency Act (PStTG) and DAC-7 Directive – Significance for VAT

Digital platforms on which entrepreneurs from all over the world can process their sales have become significantly more important. This poses a real challenge for the tax authorities, and a considerable portion of this turnover is probably not being taxed at the moment. This is also because there are still problems in the way the tax authorities of different EU Member States share information. The EU has addressed this issue with the DAC-7 Directive, which was implemented in Germany via the Platform Tax Transparency Act (PStTG), which came into force on 1 January 2023. In a letter dated 2 February 2023, the German Federal Ministry of Finance (BMF) commented on some issues needing clarification. Here, we shed some light on how these relate to VAT obligations.

What are DAC 7 and PStTG and what obligations do they present?

The DAC-7 Directive is the "Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU (the Mutual Assistance Directive) on administrative cooperation in the field of taxation". It is therefore the 7th amendment of the Mutual Assistance Directive.

The Mutual Assistance Directive is designed to give the tax authorities of the EU Member States a broader set of tools for cooperation in the detection and combating of tax fraud, tax evasion and tax avoidance.

DAC 7 extends the Mutual Assistance Directive by imposing certain due diligence and reporting obligations on platform operators regarding the activities of their platform users vis-à-vis the responsible tax authority.

The platform operator must collect and verify certain information about the seller; in particular, about the turnover generated by the sellers through the platform.

The new reporting obligations in Germany are regulated in the Platform Tax Transparency Act (PStTG), which has been in force since 1 January 2023.  It defines a "user" as any person or legal entity that uses a platform (Section 4 (1) PStTG). Those users who offer services are referred to as "providers", § 4 (2) PStTG.

The law requires platform operators to report all “relevant activities of providers.”

These are

(§ 5 para. 1 PStTG):

  1. The temporary transfer of usufruct and other rights of any kind in immovable property
  2. The provision of personal services
  3. The sale of goods
  4. The temporary transfer of usufruct and other rights of any kind to means of transport

Some providers are exempt; for example, if they fall below certain de minimis limits, § 4 (5)no. 4 PStTG.

The first reporting period began on 1 January 2023. The declaration for the calendar year must be submitted to the Federal Central Tax Office (BZSt) by 31 January 2024. Anyone unsure as to whether they are required to report or how far the reporting obligation actually extends can submit an application for binding information in accordance with § 10 PStTG. The fee for this is €5,000; § 11 (7) PStTG. False reports are subject to a fine, § 25 PStTG.

The changes involving the international cooperation of the tax authorities have been incorporated into the already existing Administrative Assistance Act (Amtshilfegsetz). The General Tax Code (AO) also undergoes some changes to enhance the procedure.

To what extent does the PStTG also affect VAT?

According to the 30th recital of the DAC-7 Directive, given the importance of VAT for the functioning of the internal market, it should also fall within the material scope of application. Accordingly, the information transmitted by the EU Member States may also be used for assessing, administering and enforcing the collection of VAT and other indirect taxes.

Gone is the ability to "fly under the radar" – corrections are now urgently needed

Under certain conditions, the Federal Central Tax Office is obligated to pass on information on turnover generated abroad to the authority of the country concerned and in return receives significant information from foreign authorities for taxation purposes; § 9 PStTG.

Entrepreneurs active on platforms will therefore, from now on, no longer be able to avoid the VAT. Those who have so far failed to register for VAT should do so as soon as possible. If, in the future, the platform operator reports turnover to the BZSt for an entrepreneur active on a platform, it may result in the tax authorities investigating turnover prior to the application of DAC 7. Now is therefore a good time for affected companies to retroactively report any undeclared turnover.  Companies in that situation should consider making a voluntary declaration, but only after obtaining legal advice.

The PStTG requires the platform operators to report the name, address, and VAT ID of all providers to the tax authorities This also enables the authorities to check whether the platform operators have properly declared any revenues they earned as an intermediary that are taxable in Germany. Here, as well, steps should now be taken to rectify any past omissions.  Also, appropriate processes should be implemented to correctly record all turnover moving forward.

Relationship to other reporting and monitoring obligations

The Value Added Tax Act (UStG) already requires traders to collect certain information.

This information partly overlaps with the data to be transmitted according to the PStTG. It is therefore advisable to create a link here in the ERP system so that the same information is only entered once and is then available in both areas simultaneously and uniformly. Particularly worth mentioning are:

1. § 22f UStG – Special obligations for operators of an electronic interface

Platform operators (which are called "operators of electronic interfaces" in the UStG) are already required to document, among other things, the names, addresses, and the date/time and turnover amounts of the sales generated by the sellers active on the platform. The PStTG also requires this information to be reported, but each of these standards also requires information that goes beyond the requirements of the other.

2. § 25e UStG – Liability when trading via an electronic interface

If a trader provides supplies via an electronic interface and does not charge VAT on these supplies, the law makes the platform operator liable for the unpaid VAT. However, the platform operator may be exempted from this liability under certain conditions. The seller’s VAT ID plays a key role, and the platform operator is responsible for checking its validity. The aforementioned BMF letter explains several ways to check this. The operator of an electronic interface is not exempt from liability if it knew, or should have known – through the due care and diligence of a prudent businessperson – that the supplying trader was not (or only partially) meeting their tax obligations. We can expect the tax authorities to think that the platform operator has not performed “the due diligence of a prudent business person” if it did not fulfil its PStTG obligations and therefore overlooked any possible indications that the supplier was not fulfilling its tax obligations.

Commission transactions

In a commission transaction, there is an entrepreneur who wants to provide a supply but wishes to remain anonymous – the principal. The entrepreneur therefore uses an intermediary (the commission agent) to perform the supply in their own name but for the account of the principal.

For VAT purposes, in contrast to civil law, a chain of supplies is fictitious, meaning that for VAT purposes it is assumed that the principal provides the supply to the commission agent and the commission agent provides the same supply to the customer. From a VAT perspective, there are therefore two supplies, but for civil law purposes, there is only one. If such a transaction is carried out via a platform, the question arises as to who is the provider within the meaning of § 4 PStTG. According to the BMF letter dated 2 February 2023 (section 1.2), the person who is registered as a provider on the platform is the provider; this can be the principal or the commission agent. The BMF also addresses cases in which both the principal and the commission agent are registered on the platform. Here the decisive factor is who actually has the legal obligation to provide the relevant activity vis-à-vis the other user. In our view, this regulation is unclear. There is also the open question as to how the remuneration is calculated in the case of commissions pursuant to Section 14 (2) no. 10 PStTG. 


For VAT purposes, a distinction must be made between single-purpose and multi-purpose vouchers. If the type and place of the promised supply are already known when the voucher is issued, it is a single-purpose voucher. Consequently, in the case of chain transactions, a fictitious supply occurs, i.e., the issuer is deemed to have rendered the promised supply to the transferor and the transferor then to either another transferor or to the customer. In a chain transaction with multi-purpose vouchers, on the other hand, the transfer transactions are not subject to VAT; only the supply actually provided to the customer by the issuer is taxed. With regard to the PStTG reporting obligations, the question then is which of the partly fictitious supplies is the relevant activity to be reported. The Federal Ministry of Finance clarified (sections 1.9 and 1.10) that the VAT distinction between single-purpose and multi-purpose vouchers is irrelevant to the reporting obligations. If vouchers or similar are in the form of a physical object, they are to be treated as goods. In the case of a voucher chain transaction, only the party offering the voucher on the platform apparently has to be reported. This represents a significant deviation from the VAT treatment.

Supply chain fiction for distance sales via platforms

Entrepreneurs who use an electronic interface (i.e., a platform) to support certain supplies involving a third country are treated as if they had acquired and sold these supply items themselves; a chain transaction is thus fictitious according to § 3 (3a) UStG.

The BMF has clarified that this supply chain fiction is irrelevant to the PStTG. Here, too, there is therefore a discrepancy between the VAT declarations and the PStTG declarations.

Dated: 3 March 2023

Want to know more?