DAC7 reforms cut reporting burdens for low-value sellers whilst increasing VAT compliance responsibilities for online marketplaces from Jan 2028
The European Commission has published proposals to reform DAC7, the Directive on Administrative Cooperation. These are the 2024 implemented rules requiring digital marketplaces to report seller transactions to EU tax authorities for automatic exchange between member states.
Rather than another amendment, the Commission is consolidating all previous DAC directives into a single legislative framework. The objective is to simplify compliance, improve the quality of information exchanged between tax authorities and reduce reporting that provides little tax value.
The upcoming Irish Presidency of the Council of the EU wants to conclude negotiations by the end of 2026, allowing Member States to implement the rules by the end of 2027, with most changes taking effect in 2028.
DAC 7 digital platform seller reporting rules came into effect on 1 January 2023, with the first reports submitted by 31 January 2024. It introduced a standard EU-wide reporting framework requiring digital marketplaces to collect information on their third-party sellers and submit it to tax authorities, with the data then automatically exchanged between EU member states. Failure to comply can result in substantial penalties.
DAC7 applies to sellers of goods, services, accommodation rentals and transport, covering virtually all transaction types including B2B, B2C, B2G and peer-to-peer supplies. Similar reporting standards have since been adopted by the OECD and are being implemented by countries outside the EU.
Higher reporting threshold
The Commission proposes removing the existing 30-transaction threshold for sellers of goods and increasing the annual reporting threshold from €2,000 to €3,000.
The change should exclude many casual and low-value sellers from DAC7 reporting. However, marketplaces will still need to identify which sellers remain reportable, so seller due diligence obligations remain largely unchanged.
Stronger VAT enforcement
While reporting obligations are being eased for occasional sellers, the Commission is proposing stronger enforcement powers against non-compliant third-country platform operators.
The measures include clearer sanction rules, enhanced cooperation between tax authorities and the ability to conduct simultaneous controls of non-EU platform operators. This continues the EU’s strategy of using digital marketplaces as a key tool in improving VAT compliance.
Digital TIN verification
The proposal also includes development of an EU-wide automated Tax Identification Number (TIN) verification service by 31 December 2030.
Although use of the service would be voluntary, platforms successfully verifying a seller’s TIN could reduce the amount of identification information they are required to collect and report. Equivalent verified identification services would provide the same benefit.
Practical implications
The proposal is now entering the EU legislative process and may change before adoption.
However, marketplace operators should already begin reviewing seller threshold monitoring, reporting logic and compliance processes. Whilst DAC7 reporting may become simpler for occasional sellers, the responsibility on platforms to identify reportable traders and support VAT enforcement continues to grow.
