What is DAC7?
DAC7, officially Directive (EU) 2021/514, requires digital platform operators both inside and outside the EU to collect, verify, and report data on sellers on their platform to tax authorities annually. The reporting applies to platforms that facilitate sales, rentals, or services, regardless of the size of the business.
The core of the measure is to create equal tax rules between traditional businesses and online platforms and to prevent tax evasion by sellers who remain under the radar. This is not about imposing extra taxes, but about sharing uniform information with tax authorities within the EU.
The reporting deadline is strict: all data on sellers and their income must be submitted by January 31 of the following calendar year at the latest. For data from 2025, this means a hard deadline of January 31, 2026.
Who is subject to DAC7?
In practice, many more organizations are subject to DAC7 than expected. Any platform that connects buyers and sellers and charges a fee or commission falls under the directive. This includes not only well-known names like Airbnb, Vinted, or Uber, but also small, specialized platforms, including start-ups and marketplaces in niche markets.
According to Johann Rozario, CEO of compliance platform Supplied, awareness is still low: many entrepreneurs do not realize that they fall under this law, let alone that they know how to report. This lack of preparation can be costly. Fines can reach up to one million euros, and in cases of repeated or serious negligence, restrictions on business operations can be imposed.
What does DAC7 mean for IT infrastructure?
For IT teams, DAC7 is primarily a technical challenge. The directive requires that 22 data points be collected and reported correctly for each seller, such as the TIN (Tax Identification Number), VAT number, address details, and total fees per quarter.
Without central data collection and automated validation, this process is time-consuming and error-prone. In practice, seller data is often spread across various systems: CRM, payment processing, user management, KYC solutions. Manually combining that data results in a high margin of error. Currently, 34% of TINs and 28% of VAT numbers contain errors, and an average of 50 days is needed for the entire process from validation to reporting.
Why automation is essential
Manual processes are not scalable. Automated solutions prove to be much more efficient: they reduce errors by 90%, save up to 70% on manual labor, and can automatically generate the correct XML reporting format required for DAC7. According to Rozario, this also significantly reduces the risk of fines – by more than 80%.
An additional benefit is that automation not only makes compliance easier but also contributes to data quality and consistency. While the manual approach often leads to reactive corrections, automation enables organizations to proactively monitor, signal, and report.
IT teams play a crucial role in preparing for DAC7. It starts with a clear scope analysis: which parts of the organization or which platforms fall under the obligation? In collaboration with compliance or legal departments, the data flow must be mapped out.
Next, it is important to centralize data sources through a data hub or integration platform. This allows seller data to be consolidated and automatically validated. By incorporating automated checks on TINs, VAT numbers, and addresses, errors can be detected at an early stage.
Finally, reporting tools in the IT stack must be able to export in the official XML format required by the Tax Authority. A 'system-to-system' connection ensures that the data can be delivered securely, structured, and timely. Simulations or tests are essential to verify that the entire flow – from data collection to submission – is stable and accurate.
DAC7 requires technical readiness
Where last year was seen as a transition year with leniency from the Tax Authority, 2026 will be the year of serious enforcement. For platforms that operate manually, time is short. DAC7 requires more than just ticking off a legal box: it demands robust IT processes, integrations, and validation mechanisms.
IT teams that invest in automation now not only reduce risks but also build structural data reliability. This makes DAC7 not just an obligation but also an opportunity to strengthen the foundation of digital platforms.
