VIR Statement on the Draft Bill on the Automatic Exchange of Information on Income (DPI MCAA)

The Association of Online Travel Agencies (VIR) generally welcomes the goal of combating cross-border tax evasion and supports fair, internationally coordinated taxation of the platform economy. However, the VIR takes this opportunity to comment in order to highlight a structural imbalance that is further exacerbated by the present draft bill.

I. Lack of evidence of effectiveness for the existing reporting requirements

Since January 1, 2023, the Platform Tax Transparency Act (PStTG) has required platform operators to report sellers’ revenues annually to the Federal Central Tax Office. The explanatory memorandum to the original draft bill projected significant additional tax revenue.

Three years after these obligations took effect, there is no reliable assessment of their impact. Two parliamentary inquiries to the federal government regarding the results of the information exchange have not received a substantive response regarding the actual additional tax revenue generated or the cases of tax evasion uncovered.

The VIR considers it a fundamental requirement of good legislation that, before expanding existing reporting obligations, it must be demonstrated that the current obligations fulfill their intended purpose. Such proof has not yet been provided.

II. Increased compliance costs without evidence of proportional benefit

This contract law and the proposed follow-up law amending the PStTG will impose a significant additional burden on platform operators subject to reporting requirements:

• Extension of due diligence obligations to providers from up to 33 third countries (as of the date of signing), with a dynamically expanding list of countries

• Retrofitting onboarding systems to collect TINs, proof of residency, and dates of birth for provider groups that have not yet been registered

• Ongoing monitoring of the OECD list of active bilateral exchange relationships as an ongoing process

• Technical adaptation of reporting processes to the OECD Common Transmission System as a second parallel transmission channel alongside the existing EU channel

At the same time, the explanatory memorandum to the draft bill makes a sweeping claim that there will be “no compliance costs for the business community”—noting that these costs were already quantified in the 2022 PStTG Implementation Act. This statement is factually untenable. The compliance costs calculated at that time applied exclusively to EU providers. The extension to third countries imposes structurally new requirements that were not taken into account in the legislative process at that time.

III. Contradiction with the political goal of reducing bureaucracy

The federal government has declared the reduction of bureaucratic burdens on businesses a top priority. This draft bill directly contradicts that goal: it imposes new compliance obligations on existing structures whose effectiveness has not been evaluated, and defers the specific details of the obligations on businesses to a subsequent legislative process—the timing of which has not yet been determined—to amend the PStTG.

This approach—establishing rules under international law without simultaneously clarifying the practical implications for the economy—makes it difficult for companies to plan effectively and runs counter to the principle of conducting an impact assessment before establishing regulations.

IV. Claims

The VIR requests that the legislature, prior to the adoption of the Contract Act and as part of the announced amendment process for the PStTG, do the following:

1. Impact Assessment of the PStTG: Publication of a reliable summary of the data reported since 2023—specifically: How many cases were identified through the audit materials? What specific additional tax revenue was generated?

2. Realistic assessment of compliance costs: A reassessment of the compliance costs associated with the expansion to include third countries, based on an independent analysis, rather than relying on three-year-old calculations intended for a different scope of application.

3. Alignment of the Contract Act and the PStTG Amendment: The scope of operational obligations for platform operators should not remain open-ended due to a subsequent legislative process of indefinite duration. The VIR calls for the PStTG amendment process to be closely aligned with the effective date of the Contract Act, while providing companies with sufficient time to comply.

4. Monitoring Mechanism: Introduction of a structured reporting mechanism that provides the Bundestag with annual updates on the effectiveness of information exchange—as a basis for evidence-based refinement of the regulatory framework.