DAC7 Reporting Obligations 2025
With the introduction of DAC7 in 2022, online retailers trading on marketplaces such as Amazon may fall within the scope of the new reporting obligations of digital platforms. Under the new initiative, online marketplaces must report sellers’ revenue and business information to tax authorities annually when facilitating supplies to EU consumers.
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What is DAC7?
DAC stands for ‘Directive on Administrative Cooperation in the field of taxation’. It’s the 7th amendment to the Directive, hence DAC7. It is EU legislation that requires digital platforms operating in the EU to report the income of the sellers on their platform to tax authorities. Platforms must also send this information to the seller, so they can see what is being communicated to Tax Authorities on their behalf.
Platforms need to identify reportable sellers, perform their due diligence and inform the sellers when their information is being reported to the authorities to comply with their new reporting obligations.
When did DAC7 take effect?
Whilst the directive was agreed in 2022, EU Member States had until the end of 2023 to transpose the changes into their domestic law. Marketplaces had to report on 2023’s transaction data by the 31st of January 2024.
Sweden launched an online service dedicated to the marketplace reporting obligations in 2023. Online marketplaces facilitating supplies to EU consumers on behalf of reportable sellers had until June 30th 2023 to register.
Who is affected by DAC7?
DAC7 creates the concept of the “Reportable Seller”. There are several criteria that would make you a reportable seller:
- Any EU resident (an individual or a company) using an online platform to carry out reportable activities
- Non-EU individuals or businesses renting out property in the EU
Sellers in the EU must pass a threshold of either EUR 2000 or 30 transactions a year to qualify as Reportable Sellers. Reportable activities include:
- The sale of goods
- The rental of a mode of transportation
- The supply of personal services
- The rental of immovable property
When is DAC7 Reporting Required?
Reports for a calendar year must be filed by the digital platform by the end of January of the following year. For example, 2023’s report had to be filed by 31st of January 2024.
Why does DAC7 matter?
The new initiative illustrates the increasing role of digital platforms in tackling tax compliance and fraud in the EU. DAC7 reporting implies an increase in information sharing between EU member states and therefore more scrutiny and potential for audits. One of the amendment’s goals is to create transparency, helping authorities to assess and compare income tax and VAT. DAC7 will also allow EU Member States to open joint audits on cross-border sales.
DAC7 doesn’t create new tax obligations for online marketplace sellers. If you fall under the reporting obligations, you should be complying with your existing liabilities.
Does DAC7 change how marketplaces collect VAT?
No, DAC7 introduced obligations separate from the VAT collection by marketplaces. It does not change your VAT liability or that of the marketplace on which you sell. It is an additional reporting obligation for marketplaces.
What happens if I don’t submit the right information to marketplaces?
Ebay, Amazon, Etsy and Vinted all have different penalties for non-compliance, so we advise you to check their terms of service. The most common consequence is that your account could be suspended or deactivated, and your funds withheld.
What do I do if marketplaces haven’t reached out to me?
We suggest reaching out to them to ensure you are complying with your VAT obligations when trading in the EU. You can voluntarily supply the required information to Amazon at any time.
Has Amazon set a deadline for sellers to update their trader information?
When the amendment came into effect, Amazon gave reportable sellers until 1st October 2023 to provide their information. Once you become reportable, you have 60 days (about 2 months) to send the required details. You must do so for each Amazon store you use in your Seller Central Account. Failure to do so may result in the marketplace deactivating your account and withholding funds until you comply with the requirements.
Does DAC7 concern sellers in the UK using marketplaces such as eBay and Etsy? We sell to the EU through these platforms, will we have to do anything?
DAC7 affects EU sellers selling any type of goods into the EU. Non-EU sellers (i.e., UK sellers) can also be affected if they supply rental accommodation. However, the UK has similar requirements which were introduced in 2023.
Is there a DAC7 UK?
The equivalent to DAC7 in the UK is Reporting Rules for Digital Platforms. These rules are based on the Organisation for Economic Development (OECD) model reporting rules. A consultation on the draft regulation was undertaken in 2022, and the rules came into force in January 2024.
I’m using a crowd-funding platform, do I need to worry about DAC7?
Crowd-lending platforms and payment service providers are outside the scope of the obligations. However, crowdfunding may be and therefore, we also suggest that you make sure you are on top of your tax obligations when choosing to use one of these platforms.
