DAC 7: EU Proposed changes to information reporting by digital platforms

On 25 November 2020, the Council of the European Union unveiled its updated draft of proposed EU Directive 2011/16 on administrative cooperation. The proposed directive marks the seventh amendment to the directive on administrative cooperation (DAC), earning itself the DAC 7 nickname. The proposed DAC 7 originally unveiled on 15 July 2020, forms part of the European Commission’s Tax package.

It proposes an extension of the existing provisions regarding the exchange and reporting of information and administrative cooperation to digital platforms, placing an obligation on platform operators to collate and report information on income realised by sellers on their platforms. It aims to reduce administrative and reporting burdens and compliance costs for platform operators across the EU by streamlining reporting.

In addition to the above, it also aims to remedy the challenges facing tax authorities posed by the digital economy in the traceability and detection of taxable events and under reporting of income earned by platform sellers and gig economy income.

Scope of DAC 7

Platform operators: captured and required to report under DAC 7 are defined in broad terms, as ‘any software, including a website or a part thereof and applications, including mobile applications, accessible by users and allowing sellers to be connected to other users for the purpose of carrying out’ any of a list of specified relevant activities. The reporting obligation will cover both cross-border and non-cross-border commercial relevant activities carried out for consideration, which are:  the sale of goods; the rental of immovable property, including both residential and commercial property, as well as any other immovable property and parking spaces; a personal service; and the rental of any mode of transport.  It also includes any arrangement for the collection and payment of a Consideration in respect of a relevant activity.  An earlier draft of the directive provided for reporting on investment and lending in the context of crowdfunding. However, such provisions were removed in the current draft. Only online platforms which connect seller and customer directly are reportable under DAC 7.  Specifically excluded are platforms operating software that, without any further intervention in carrying out a relevant activity, exclusively allow any of the following: processing of payments in relation to relevant activity; users to list or advertise a relevant activity; or, redirecting or transferring of users to a platform.

Reportable sellers: The territorial scope of the platforms having reporting obligations under DAC 7 is far reaching. It includes both platforms with permanent establishment’s in the EU and non-EU platforms that facilitates the carrying out of relevant activities by reportable sellers or the rental of immovable property located in  – member states.   A seller reportable under the directive includes an individual who is resident or in possession of a tax reference number, or an entity with a PE in a member state. Sellers, irrespective of residence, who rented out immovable property located in a member state in a reportable period, are required to report. Specifically excluded from reporting is any seller for which the platform operator facilitated less than 30 relevant activities by means of the sale of Goods and for which the total amount of consideration paid or credited did not exceed €2,000 during the Reporting Period. Also excluded from reporting are Governmental Entities, publicly traded entities or any seller for which the platform operator facilitated more than 2,000 relevant activities by means of the rental of immovable property in respect of a property listing during the reporting period (e.g. hotel chains).

Obligations imposed on platform operators

Under the current draft directive, the platform operators are required to collect and report the following information regarding a reportable seller:

  • name;
  • date of birth,
  • address;
  • tax identification numbers, including states of issuance;
  • VAT identification numbers;
  • business registration number;
  • details of any permanent establishment through which relevant activities are carried out in the Union, indicating each respective Member State;
  • financial account identifiers.

Where the relevant activity involves the rental of immovable property, the following information is to be reported:  

  • address and land registration number of each property listing;
  • number of days each property listing was rented;
  • total consideration paid during each quarter; and
  • any fees, commissions, or taxes withheld or charged by the platform during each quarter.

The required information must be returned by the platform operator by the 31 January of the year following the year in which the reportable seller has been identified as reportable. The first return of information will be due in relation to the calendar year 2023 and must be filed by 31 January 2024.

Platform operators are required to verify reportable information on sellers and immovable property and must complete the due diligence procedures by 31 December of the reportable period.  There is a 12-month grace period for carrying out due diligence in respect of reportable sellers registered as at 1 January 2023.  Reporting will only be required to a single authority in a member state. The information disclosed will be automatically exchanged on an annual basis with relevant member states within two months of the period end.


  • DAC 7 affirms the continued intention of the EU to ensure tax transparency and compliance across the EU.
  • DAC 7 places mandatory reporting obligations on platforms, regardless of whether they have a presence in the EU.
  • Platforms subject to DAC 7 will have to invest considerably in their internal compliance procedures and may have to consider the implications of DAC 7 on their Terms and Conditions.
  • While the first reporting obligation fails due on or before 31 January 2024, relating to the year ended 31 December 2023, platform owners should now be considering the obligations placed on them under DAC 7 and implement strategies to ensure they are in a position to meet these new compliance obligations.