Learn how DAC7 affects your digital platform - Gigapay

Learn how DAC7 affects your digital platform

You may have heard of DAC7, but not really taken the time to read up on what it actually means for you and your business – if it affects you at all. Here you will be able to get insights into what DAC7 is, take a test if it applies to your digital platform, and read about how it may affect you.

Why don’t you start by taking our test to see if you are likely to be affected by DAC7?

What is DAC7?

DAC7 is a directive on cooperation between different EU member states on gathering and reporting data about natural and legal entities and their earnings through digital platforms and marketplaces. Consequently, certain digital platforms will be responsible for collecting, verifying, updating, and reporting data about the sellers in the platform and their earnings. Digital platforms have to start collecting data from the 1st of January 2023. Furthermore, the digital platform has to submit its first report by the 31st of January 2024. Bear in mind that different EU countries may implement the Directive slightly differently. However, this should serve as a general guideline for the minimum requirements.


What do I have to do?

If you are responsible for reporting DAC7 data, there are a few things that you need to do. In brief, you need to (1.) collect data, (2.) verify data, (3.) update and manage data, and (4.) report data. These steps are described briefly below.

To be DAC7 compliant as a platform you need to (1.) collect certain data about your Sellers, (2.) you need to verify the collected data, (3.) update and manage data over time to ensure that it is accurate, and (4.) you need to report the data annually to the tax authorities.

Where do you report?

The digital platform shall report the data collected about the seller as well as the payments going through the platform. The digital platform is responsible to submit the reports to the competent authorities in one jurisdiction. The competent authority will then forward it EU country in which the Seller is based. The jurisdiction, in which the digital platform reports, depends on where the digital platform is located and its corporate structure. A simplified list can be found below:

  • A digital platform that is based in only one EU country, has its management in only one EU country, or has a permanent establishment in only one EU country shall report the data to the competent authority of that country.

  • A digital platform that is based in several EU countries, has its management in several EU countries, or has a permanent establishment in several EU countries shall report the data to the competent authority of its election.

  • A digital platform that is not based in an EU country, does not have its management in an EU country, or does not have a permanent establishment in several EU countries, shall register with the competent authority in the EU country of its choosing and report the data there.

Note that the digital platform is only responsible for reporting the data to the competent authority in one of the EU countries, it will then be up to the competent authority to share the data with the competent authorities in countries the Sellers are based.


Consequences of non-compliance

The EU-member states may set their penalties for non-compliance with DAC7 independently. However, DAC7 states that the penalties should be “effective, proportionate and dissuasive”. The Member States and their competent authorities are responsible to implement DAC7 into their laws and regulations. Consequently, there may be discrepancies between the penalties in the different Member States. Furthermore, the penalties may be decided on a case-by-case basis depending on the seriousness of the offense. Furthermore, the Member States shall take coordinated action against non-EU digital platforms that are not fulfilling the requirements. This involves making it difficult or impossible for those digital platforms to operate.


Do you have any questions about DAC7?

Feel free to contact us with any questions or comments you may have about DAC7. You can send a question or comment by filling in the form below and we will return to you as soon as we can.