EU platforms must collect and report seller income data to tax authorities. What triggers reporting, what is excluded, and how the data flows downstream are not all obvious from the regulation itself.
DAC7 requires platform operators — defined broadly to cover digital marketplaces, short-term rental platforms, freelance platforms, and transport services — to collect due diligence information from sellers and report their activity annually to the relevant EU tax authority. The data is then exchanged automatically between member states.
Reporting applies to “reportable sellers.” Exempt categories include publicly listed companies, government entities, and sellers with fewer than 30 transactions and below €2,000 in annual platform earnings.
DAC7’s definition of platform operator is broad enough to capture services that do not describe themselves as marketplaces. The relevant question is whether the platform facilitates transactions for which sellers receive consideration.
The automatic exchange mechanism makes data reported in one member state available to tax authorities across the EU. Early indications suggest authorities are using the data for income cross-referencing and audit selection. The framework was designed to produce audit intelligence, not just compliance records.