Ministry of Finance

The BigBrotherAward 2023 in the category “Government and Administration” goes to the Federal Ministry of Finance, represented by the Finance Minister Christian Lindner. This BigBrotherAward is given for the Law on Tax Transparency for Platforms (Plattform-Steuertransparenzgesetz), which entered into force on 1 January 2023. Intended to ensure “fairer taxation” in the sector of online platforms, the law was initially focused on business portals such as airbnb or Uber. But it also coerces platform providers into comprehensive data retention on private “flea market sales”.
Prof. Dr. Peter Wedde am Redner.innenpult der BigBrotherAwards 2021.
Prof. Dr. Peter Wedde, Frankfurt University of Applied Science

The BigBrotherAward 2023 in the category “Government and Administration” goes to the Federal Ministry of Finance, represented by Finance Minister Christian Lindner.

We bestow this BigBrotherAward 2023 for the Law on Tax Transparency for Platforms (Plattform-Steuertransparenzgesetz), which entered into force on 1 January 2023.

What follows from this new law? Who is affected?

The law affects all people who privately sell goods on Internet platforms such as Ebay or Ebay Classifieds, after they cleared out their cellar. When the platform operator notices that a seller has reached a number of 30 sales and a total revenue of more than €2,000 within a calendar year, the relevant data must automatically be submitted to the Federal Central Tax Office (Bundeszentralamt für Steuern). This is the new threshold beyond which reporting is required. Furthermore, this information must be retained for ten years after submission, by both the platform operators and the financial administration.

The law therefore imposes a ten-year requirement for data retention on two parties, even though there are no tax obligations whatsoever for most private sales, even beyond the completely arbitrary reporting threshold. Also, a clear and narrow limitation of intended purposes for processing the retained data, which data protection regulations would require, is nowhere to be seen.

The justification for this tax transparency law1 is that it transposes the EU directive on “Mutual Assistance”, which regulates information exchange between European government agencies for tax purposes, into German law. However, this law goes above and beyond this goal. To create “fairer taxation”, is the official explanation.2

Of course it is right to tax income from, for example, permanent “airbnb” leases or from “Uber” car hiring services, just the same as sales by “power sellers” via an “ebay” platform. It is not right, however, to oblige platform operators to process all the data they acquire in order to filter out those privately selling more than 30 items in a given calendar year, yielding more than €2,000 in revenue.

Following such reports to the Federal Central Tax Office, private sellers may now be faced with a sweeping tax demand from their local tax authority – unless they can provide receipts to prove the date of purchase and the amount they originally paid for the items they sold. Of course, many people throw away their receipts when warranty periods have expired, or some even earlier.

The argument that this is just about fair taxation is void, not least because tax obligations on private sales are limited. According to Article 23 of the income tax law, articles of daily use (for example used baby clothes, or a kitchen appliance that is no longer needed), and articles that have been in someone’s possession for more than a year, are exempt from taxes. For articles that are resold within a year, taxes have to be paid only when the profit exceeds €600. Taxation is the exception for private sales, not the norm.

However, the platform tax transparency law is based on the assumption that the tax offices are missing out on taxable revenues unless exhaustive information is collected by the platform operators. Following this logic, tax investigators would have to be posted to all private flea market stalls to record sales and revenue figures.

In order to fulfil the reporting obligations to the tax authorities according to Article 13, paragraph 2 of the new law, portal operators now have to process the following data for all sellers:

  • First and last names of sellers, dates of birth, and addresses

  • Tax identification numbers, and, if applicable, VAT number or company accounts

  • Fees, commissions and taxes, which the portal operators have deducted or invoiced for private sales

  • Paid or credited remunerations which have been received by private sellers from the portal operators, per quarter of the reporting period

Beyond that, according to Article 18, Paragraph 1 of the law, the portal operators have to run a plausibility check on all sales, using all legally available information and documents. What the term “plausibility check” is supposed to mean here has not been specified by the legislator at all. A comparison of the sellers’ addresses and tax identification numbers with the “transaction documentation” of the reporting platform operator is mentioned as an example.

By failing to specify a conclusive list of permissible purposes for data processing, the platform tax transparency law gives carte blanche to the portal operators for screening and analysing the behaviour of private sellers, and for using acquired knowledge for their own interests.

The collected data could be used, for example, to train AI software to detect all kinds of abnormalities in purchasing behaviour. After all, that’s what the law requires. How very convenient.

This kind of comprehensive data retention is not required for the legislator’s objective of fair taxation. Telling apart “private flea market sales” from professional and thus taxable sales only masquerading as private is something that platform operators have been able to do already. They can also determine if private re-sales of new items yield taxable revenue.

Platform operators know exactly, even today, what value a used item has, and what kind of profit can be made from private sales in an individual case. This kind of knowledge is apparent in “suggested prices”, which are shown to sellers on many platforms for classified ads when creating new private sales advertisements. To illustrate, let us take a look at the “luxury” segment: for the private sale of a brand-new Rolex “Submariner Date 126610LN” (current retail price €10,100) a large sales portal suggests a price between €11,000 and €15,900 once the relevant information is supplied. Even when selling at the minimum suggested price, this offers a quick profit above the tax-free limit of €600. Privately offering a new Junghans Max Bill Automatik watch (current suggested retail price €1,325) yields a different picture: the suggested price goes from €480 to €1,200.

To approach the goal of fair taxation, it would have been entirely sufficient for the platform tax transparency law to mandate reporting about obviously taxable profits, instead of a sprawling, exhaustive data retention without any transparent and conclusive definition of processing purposes, which takes us back to the Grey Ages. After all, something similar happened almost exactly 40 years ago, when a census was planned. The Federal Constitutional Court (Bundesverfassungsgericht) ruled on 15 December 1983 that this was a violation of the “right to informational self-determination”.

The European Court of Justice also thinks that a legally mandated, comprehensive governmental retention of data of persons who are not even indirectly liable to criminal prosecutions is incompatible with EU law.3 This also covers persons engaged in non-taxable private online sales.

Against this background, an assessment of the platform tax transparency law from a data protection perspective can reach only one result: a data retention that is mostly useless and intransparent to the affected persons is in violation of the general principles of Article 5 Paragraph 1 of the GDPR, such as the transparency of processing, purpose limitation and data minimisation.

It is our hope that the legislator will see the BigBrotherAward 2023 as motivation to extensively rework the platform tax transparency law and to limit the reporting mandate to such cases where a tax obligation is obvious, instead of targeting all those people in their sights who offer their hamster cages, prams or winter coats for sale online.

The legislator should not wait for the courts to do their work for them. In this sense, congratulations to the Federal Ministry of Finance and the Finance Minister Christian Lindner, for the BigBrotherAward 2023.


Prof. Dr. Peter Wedde am Redner.innenpult der BigBrotherAwards 2021.
Prof. Dr. Peter Wedde, Frankfurt University of Applied Science

1 Bundestagsdrucksache 20/3436, 19 July 2022.

2 Bundestagsdrucksache 20/3436, page 38

3 See ECJ judgment C-793/19, 20 Sep 2022 – paragraph 85

About BigBrotherAwards

In a compelling, entertaining and accessible format, we present these negative awards to companies, organisations, and politicians. The BigBrotherAwards highlight privacy and data protection offenders in business and politics, or as the French paper Le Monde once put it, they are the “Oscars for data leeches”.

Organised by (among others):

BigBrother Awards International (Logo)

BigBrotherAwards International

The BigBrotherAwards are an international project: Questionable practices have been decorated with these awards in 19 countries so far.