Online sales tax audits are becoming more frequent, especially with new DAC7 reporting obligations. More and more online sellers are receiving tax authority inquiries. What triggers an audit? How do you declare income from online sales correctly? What thresholds apply, and when do you risk being classified as running a business? In a recent article on Prawo.pl, Piotr Sekulski, PhD, comments on these growing risks.
Online Sales Tax Audits and the DAC7 Directive
Online sales tax audits are becoming increasingly common. It’s time to consider: how do these audits work? How should you properly report income from online sales? Who should be on alert? And how will the DAC7 directive impact PIT filings for online sellers?
We’ve covered this issue earlier:
These issues were addressed in a recent Prawo.pl article, featuring comments by Piotr Sekulski, PhD, tax advisor at Outsourced.pl.
tax advisor Piotr Sekulski, PhD
– In practice, we’re seeing that more and more individuals are receiving requests to explain their online selling activities. These are informal procedures, most similar to verification steps, aimed at clarifying two types of situations. First, the tax office is checking why someone who exceeded the statutory limit (30 transactions per year or EUR 2,000 in revenue) hasn’t filed a PIT return and paid tax. Second, it examines whether the scale and frequency of sales may indicate that a person is in fact running an undeclared business.” (…).
“However, the tax authority is also identifying cases in which people do not pay tax despite engaging in online sales on a scale that suggests business activity. It sometimes happens that someone earns tens or even hundreds of thousands of zlotys annually from online sales without declaring the income. In such cases, the tax office does not accept explanations that it was merely a sale of used personal items. For example, one taxpayer failed to convince the authority with her claim that she had ‘fallen for advertising’ on a popular sales platform and simply wanted to clean out her home by selling several hundred items of clothing.” (…)
How can we help?
We always recommend consulting a tax advisor before taking any actions involving online sales or responding to a tax authority inquiry. If you want to better understand how online sales tax audits work and how to protect yourself, feel free to contact us.
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