New Digital Platforms Law: What Freelancers Need To Know About The 5% Tax

Understanding Bill No. 15111-d

The digital world is buzzing with news of the recently adopted Bill No. 15111-d, which has stirred up conversation around the taxation of income for those working with digital platforms. While the media has primarily focused on platforms dealing in goods, taxis, and food delivery services, the reach of this law is much broader than initially perceived.

Platforms like OLX, Prom, and Rozetka are in the spotlight, but the implications extend to other business segments such as tutoring, psychological and medical support services, and even OnlyFans. Notably, content creators on OnlyFans have historically managed to successfully contest fines in court, mainly due to a lack of clear mechanisms for tracking income on international platforms.

“With the new law, these gaps are expected to close, enabling more effective taxation processes,” industry insiders suggest.

Impact on Freelancers

The introduction of the Multilateral Competent Authority Agreement on Automatic Exchange of Information on Income Derived Through Digital Platforms (DPI MCAA) means that data obtained from international platforms will now carry weight in court. This shift signifies a significant change in how freelancers and content creators will be taxed.

For those using platforms like Upwork, the new law mandates either registering as an individual entrepreneur or facing a 5% income tax. Platforms will serve as tax agents, communicating with the State Tax Service on behalf of freelancers, tutors, psychologists, and more.

The Fine Print

Income below 2,000 Euros annually won’t be taxed, providing some relief for occasional sellers. However, those earning up to 834 times the minimum wage will face the full brunt of the new regulations. While this brings freelancers closer to the conditions of sole proprietors, it also introduces challenges, including military duty and social security contributions.

The potential additional tax burden is a point of contention, but for platforms, these changes might simplify operations by reducing pressure from tax authorities. As data becomes more accessible, freelancers may receive tax notifications more swiftly, potentially leading to a surge in litigation. The question remains: is the 5% tax a fair trade-off for clearer regulations?