UPDATE: We have confirmed everything with our law team and DAC7 forms are coming by the end of the year.
The EU’s latest tax directive, DAC7, which kicked in on January 1, 2023, brings new rules for online marketplaces. For us, these new laws apply today, because in Poland (where SWAPD is registered), this unfavorable-for-everyone law went into effect much later. For the previous tax year (2023), we’ll generate a Form DAC7 for all EU-based freelancers and agencies who signed up on SWAPD in 2023 and made earnings over 2000 EUR. (Those who joined before 2023 aren’t affected by this directive yet.)
We have to send this form to your tax authority and report all payments made to you, if you’ve earned more than 2000 EUR or made 30x transactions.
Just like any business, we’ve got to play by the tax rules. When you make money on SWAPD, you’ve got to follow the tax regulations that apply to you too. We can’t offer legal or tax advice, but we can let you know what documents you’ll get from us.
If you’re a freelancer living in the EU and earning through SWAPD, you need to report this income on your tax return, even if you don’t get any forms from us. We will send a Form DAC7 to all residents in EU member states who signed up in 2023 and received payments from clients on SWAPD during the calendar year.
Which countries are affected?
All of the European Union + 16 other countries (unconfirmed 16 countries, but UK joined for sure)
What does this mean for me as a seller who made 2000 EUR or more?
This means that your SWAPD account will be temporarily blocked in the upcoming weeks. To unlock it, you will need to fill out a DAC7 form, which requires full name/address/TIN/EIN/DOB and payment account details. Once that’s filled out, SWAPD will be forced to send monthly reports of your earnings to the Polish IRS.
What happens if I don’t comply?
DAC7 directive gives users 60 days to comply. If users do not proceed, we will be forced to close their accounts. In addition, submitting fake data will also lead to account termination.
This is madness, any way around it?
No. Even 16 non-EU stats are joining (or will soon join this program). This is a massive change to the way business happens online. In short, the governments are hungry for money, and they want to make sure you pay your taxes.
Can SWAPD not comply?
The governments are becoming crafty. They have placed THEIR responsibility (of tracking down people who don’t pay taxes) under the control of business owners, under very stiff penalties. Not complying would eventually land us with millions in fines.
Can SWAPD move to a country where this doesn’t apply?
Yes, but it would do no good. The law states that even if you’re outside of the jurisdiction, you still need to report if you do business inside the DAC7 countries.
Well, screw this. I am leaving SWAPD, then.
We figured some of you may actually do that, but just so you know, virtually all the reputable places already report you, as they’ve complied with the DAC7 directive. This includes Fiverr, Amazon, eBay, UpWork, Flippa, Sedo, NamePros, all your local versions of auction sites, Vinted, etc. The lesser-known/underground sites most likely don’t do that until they get in trouble.
To conclude this onslaught of bad news, governments are getting greedy and they are holding knives under online business owners’ throats. You have three options here if you’re a serious seller and this is your means of generating income, and they are:
- Go underground on underground sites
- Quit
- Actually pay your taxes
I personally do not know whether the information our local IRS will collect from us will affect users who are not from Poland. It’s best to contact your local tax advisor and ask for help. But if you’re from Poland, you should work on going legal with your taxes. Otherwise, you may be in trouble.
P.S. Sites like Binance/CoinBase/Kraken, which many of our users use to accept/send payments (those who aren’t filing taxes), have been reporting your crypto activity to the IRS for years. That also includes Wise/Zen/Revolut/etc.
