EU DIRECTIVE 2021/514
DAC7 – Digital Platform Reporting Regulation
Understanding your obligations as a seller on digital marketplaces under the European Union’s mandatory tax transparency rules.
OVERVIEW
What is DAC7?
DAC7, short for the seventh amendment to the EU Directive on Administrative Cooperation in the field of taxation, is a European Union regulation that requires digital platforms and online marketplaces to collect, verify, and report income-related data about their sellers to the relevant national tax authorities.
The directive was formally adopted on 22 March 2021 (Council Directive (EU) 2021/514 — read the full regulation →) and entered into force on 1 January 2023. Its primary objective is to improve tax transparency across EU Member States, reduce unreported income generated through digital platforms, and facilitate the automatic exchange of information between national tax authorities throughout the European Union.
It is important to understand that DAC7 does not introduce any new tax on selling activity. It is a reporting and information-sharing mechanism. Income earned by sellers through online platforms continues to be taxed — or exempted — solely in accordance with the existing national tax legislation of each EU Member State.
2021
Directive AdoptedThe European Council formally adopted Directive (EU) 2021/514 on 22 March 2021.
2023
Entered into ForceReporting obligations became applicable from 1 January 2023 across all EU Member States.
2024
First Reports FiledPlatform operators submitted the first annual reports — covering calendar year 2023 — by 31 January 2024.
SCOPE OF APPLICATION
Who Does DAC7 Apply To?
DAC7 applies to digital platforms that connect sellers with buyers to facilitate commercial transactions within the European Union. This includes both EU-based operators and any non-EU platform that facilitates the sale of goods or services to buyers located in the EU.
The regulation covers a wide range of economic activities carried out through digital platforms, including the sale of goods, the provision of personal services, the rental of real estate (residential and commercial), and the rental of means of transport.
Reportable Sellers — Activity Thresholds
As a seller, you are considered a reportable seller — and the platform is required to report your data to the relevant tax authority — if, during a given calendar year, you meet either of the following conditions:
→ You complete at least 30 sales transactions on the platform, or
→ Your total earnings through the platform exceed €2,000.
Meeting these thresholds triggers the platform’s reporting obligation — it does not automatically mean that the income you have earned is taxable. Tax liability is determined exclusively by the applicable national tax laws of your country of tax residence.
PROCESS
How Does It Work?
If you meet the reporting thresholds, the platform will ask you to confirm or complete a short pre-filled form containing your identification and tax information. The process is straightforward and typically requires only one piece of information to be added or verified. Here is an overview of the key steps:
1 – Platform Identifies You as a Reportable Seller
Once you reach the applicable threshold, the platform notifies you and requests that you complete or confirm the pre-filled identification form.
2 – You Submit the Form
In most cases, the form is pre-populated with the information already held by the platform. You may simply need to confirm its accuracy or add a missing detail. The deadline is typically early January of the year following the reporting period.
3 – Data is Transmitted to Tax Authorities
After you submit the form, the platform reports the relevant information to the competent tax authority — by 31 January of the year following the calendar year covered. The data is then automatically shared between EU Member States’ tax authorities.
4 – You Receive a Copy
You are entitled to receive a copy of the data reported about you, so you can verify what information has been communicated to the authorities on your behalf.
Data Security & Privacy
All personal and financial information collected under DAC7 is handled in accordance with the EU General Data Protection Regulation (GDPR). Data is stored with industry-leading security standards, including AES-256 encryption. Platforms are required to retain collected data for a period of five to ten years, depending on applicable national legislation, and must inform sellers about what data is being collected and for what purpose.
CONSEQUENCES
What Happens If You Do Not Submit the Form?
If you are identified as a reportable seller and do not provide the required information, the platform is obligated to take action to remain compliant with DAC7.
Two reminders will be issued. If you do not respond, the platform must, after a 60-day period of non-compliance, restrict or suspend your selling activity and withhold access to your account balance until the required information is provided.
Access can be restored at any time by submitting the completed form. No data is permanently lost during a suspension period.
For platform operators, failure to comply with DAC7 reporting obligations may result in significant financial penalties determined by each EU Member State, and in cases of serious or repeated non-compliance, exclusion from operating within the EU market.
LEGAL REFERENCE
The European Regulation
DAC7 is formally established by Council Directive (EU) 2021/514 of 22 March 2021, which amends Directive 2011/16/EU on administrative cooperation in the field of taxation. The directive has been transposed into the domestic legislation of all EU Member States and is directly applicable from 1 January 2023.
For the complete and official text of the regulation, please refer to:
SELLER GUIDANCE
Details for Completing the DAC7 Form
Find a step-by-step guide to filling in the DAC7 form correctly, including what information is required and where to find it.
