Graham Samuel-Gibbon


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Harriet Revington

Senior Counsel

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Graham Samuel-Gibbon


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Harriet Revington

Senior Counsel

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12. September 2023

Radar - September 2023 – 5 von 5 Insights

OECD Model Reporting Rules for Digital Platforms, DAC7 – EU and UK implementation

An extension of EU tax transparency rules to digital platforms is introducing obligations on platform operators to collect, verify and report specific information with respect to reportable sellers that have undertaken "Relevant Activities" through their platforms.  Whilst developed in the EU, the rules have a potentially significant impact on non-EU platform operators (for example, those established in the USA), where sellers or suppliers on the platform are based in the EU and carry out such activities through the platform, or where users of the platform rent out immovable property situated in the EU.

Current status

The EU's regulations implementing the OECD's Model Reporting Rules for Digital Platforms, DAC7, came into effect on 1 January 2023, with Member States having been required to incorporate DAC7 into their national legislation by 31 December 2022. 

The OECD's Model Reporting Rules for Digital Platforms are intended to ensure the tax compliance of participants in the digital economy and to promote a level playing field between online and traditional businesses.

The UK's regulations implementing these rules were made on 18 July 2023 and will come into force on 1 January 2024, with first reports due in 2025. We consider the implications of the UK regulations and their implementation in further detail here.

EU requirements


In broad terms, in-scope platform operators must:

  • collect information as part of their due diligence obligations to identify all EU-based sellers engaging in Relevant Activities (see What is a Relevant Activity?) on their platform
  • verify that the information is correct by consulting their own records and public databases that are free to use
  • report identification and transaction information in relation to Relevant Activities carried out by those sellers for the calendar year to the relevant Member State.

The first two steps must be carried out by 31 December each year, and the final step must be carried out by 31 January of the following year, although there is a temporary extension of this timeline in respect of sellers already registered when the rules came into force on 1 January 2023. Those sellers have until 31 December 2024 to carry out the due diligence and verification procedures.

Who is obliged to comply?

The obligations under DAC7 are targeted at platform operators. The definition of 'platform operator' covers all entities that contract with sellers to make available to them software that is accessible by users and which allows sellers to connect with users to carry out Relevant Activities. 

Platform operators must comply with the information collecting and reporting requirements of DAC7 if they are resident for tax purposes in a Member State, or if they fulfil any of the following conditions:

  • they are incorporated under the laws of a Member State
  • their place of management is in a Member State
  • they have a permanent establishment in a Member State and are not resident in a jurisdiction that has an agreement with the EU to exchange information equivalent to that set out in DAC7.

Platform operators may also be within the scope of DAC7 where none of the above apply, but where they facilitate the carrying out of a Relevant Activity by reportable sellers or a Relevant Activity involving the rental of immovable property located in a Member State and are not resident in a jurisdiction that has an agreement with the EU to exchange information equivalent to that set out in DAC7. The rules therefore have a potentially significant impact on non-EU platform operators (such as those established in the USA) where sellers or suppliers using the platform are based in the EU or where the platform is used to rent out property located in the EU. 

What is a Relevant Activity?

DAC7 is intended to capture information in relation to specific types of activities provided by sellers to users, each of which fall under the definition as a 'Relevant Activity'. The term 'Relevant Activity' covers any of the following activities carried out for consideration:

  • the rental of immovable property
  • personal services that involve time or task-based work performed by one or more individuals at the request of a user which are facilitated via a platform
  • sale of goods (tangible property)
  • rental of any mode of transport.

What information must be collected? 

Platform operators within scope must meet both due diligence information collection requirements and transaction information collection and reporting requirements.

Due diligence information

DAC7 imposes a duty upon platform operators within its scope to collect the information of sellers on their platforms that are either private individuals or entities and which are active sellers, to identify sellers in respect of which they must report transaction information. 

Importantly, there is a 'casual seller' exception so that no such information need be collected in respect of sellers of goods who have made fewer than 30 sales facilitated by the platform operator and where consideration was no more than €2,000 within the relevant calendar year. Similarly, platform operators need not collect such information in respect of governmental entities, listed entities and entities related to them, nor need leasers of immoveable property who have made more than 2,000 rentals facilitated by the platform operator within the relevant calendar year. Unfortunately, there is no de minimis for platform operators that facilitate sales of personal or task-based services, which results in the DAC7 requirements being onerous for platform operators who may have lots of sellers each only carrying out a few activities in a calendar year. 

Platform operators must collect identifying data on sellers (unless they are excluded due to an exception as mentioned above). Based on whether the seller in question is an individual or entity, this information includes the seller's name, address, date of birth, tax ID number, VAT registration number, business registration number, and details of any permanent establishment in the EU through which Relevant Activities are carried out.

Additionally, platform operators must verify the due diligence information above for accuracy and reliability by checking their own records, as well as using any electronic interface made available by a Member State or the EU free of charge to ensure the validity of the tax ID number and/or VAT registration numbers.  Where information is identified as being inaccurate, they must request that the seller in question corrects the information and provides supporting documentation that is reliable and of an independent source (e.g., a government-issued ID document).

Transaction information

In respect of each seller identified from the above process as having a sufficient nexus in the EU, established by being a resident in a Member State or by renting out immovable property located in a Member State, the following information must be collected and reported to the appropriate Member State:

  • the information collected as part of the due diligence exercise above in respect of the seller in question
  • the seller's Member State of residence for the purposes of DAC7
  • transaction-related information, including the seller's financial account number, amount of consideration paid and credited per quarter, number of Relevant Activities carried out, and any fees, commissions, and taxes that the platform operator has withheld. 

How should platform operators respond to sellers that do not cooperate?

DAC7 requires measures to be taken by the platform operator against sellers if they do not provide the reportable information to the platform operator after two reminders.  If 60 days have elapsed since the second reminder without a response from a seller, the platform operator must either close that seller's account and prevent their re-registration or withhold the payment of consideration to the seller, until the seller provides the information requested. 

What are the timing requirements for compliance?

Platform operators must carry out their due diligence and verification procedures by 31 December of the calendar year in respect of which they are reporting (though in respect of sellers that are already registered as of 1 January 2023, these need only be completed by 31 December 2024).

Platform operators must meet their information reporting requirements by 31 January of the year following the calendar year in respect of which they are reporting (e.g., if reporting in respect of the 2023 calendar year, information must be reported by 31 January 2024).

Platform operators may rely on due diligence carried out within the last 36 months for future calendar years in respect of which they report, as long as they have no reason to consider that information previously collected is or has become unreliable or incorrect. 

What are the penalties for non-compliance?

Under DAC7, penalties should be "effective, proportionate and dissuasive".  Although concrete implementation is left to the individual Member State, fines are likely to be the main sanction.  It is anticipated that in many cases penalties for breach of DAC7 will track penalties for breach of DAC6 (reporting of cross-border arrangements affecting at least one EU member state) rules.  This would involve potentially punitive fines where reportable sellers are based in certain EU member states, such as the Netherlands. 

If a platform operator is in breach in several Member States by virtue of failing to register itself with a Member State for the purposes of DAC7, those Member States in respect of which it is in breach shall coordinate their actions aimed at enforcing compliance and may agree to prevent the platform operator from operating within the EU as a last resort. 

UK developments

The UK government published its draft regulations to implement the OECD's Model Reporting Rules for Digital Platforms on 18 October 2022, and sought technical feedback until 13 December 2022. Final regulations were made on 18 July 2023, and will enter into force on 1 January 2024, with reporting due from January 2025. The UK rules align closely to the EU rules in order to minimise duplicated reporting obligations. 

Action for platform operators

Platform operators based in any jurisdiction should be considering DAC7 where the platform is established in a Member State or has sellers/suppliers operating or renting out property in a Member State. Impacted platform operators will have to consider how to practically gather the information that they will be required to report from the relevant sellers. They will need to put in place procedures to verify the information once received and specific processes and operations may be needed. 

To discuss the issues raised in this article in more detail, please reach out to a member of our Tax team.

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