DAC7 (EU Directive 2021/514)
EU Council Directive 2021/514 requiring digital platform operators to collect, verify, and annually report seller income data and VAT numbers to national tax authorities. Applies to marketplaces and gig platforms with 30+ sellers or €2,000+ in facilitated transactions.
DAC7 (officially: EU Council Directive 2021/514 on Administrative Cooperation in Taxation) requires digital platform operators to collect, verify, and report seller income data to their national tax authority. The data is then automatically shared with the tax authorities of all EU member states where the sellers are tax-resident. It came into force on 1 January 2023, with first annual reports due by 31 January 2024.
Who must comply with DAC7
DAC7 applies to 'platform operators' — businesses that operate a digital interface through which sellers offer goods, services, rental of property, or rental of transport. This includes marketplaces (Etsy-style, Amazon-style), rental platforms (Airbnb-style), freelance platforms (Fiverr-style), and food delivery platforms. The key threshold: if you have 30 or more active sellers in a calendar year, or facilitate more than €2,000 in transactions, you are in scope.
Note
Pure SaaS products that do not facilitate third-party seller transactions are NOT in scope for DAC7. If you sell your own software directly to customers, DAC7 does not apply to you. It applies when your platform acts as an intermediary between sellers and buyers.
Seller data you must collect and verify
| Data point | Required for | Verification method |
|---|---|---|
| Legal name (individual or business) | All sellers | Government-issued ID or business registry |
| Primary address | All sellers | Seller-provided, cross-checked with registration |
| Tax identification number (TIN) | All sellers | Format validation + national tax authority lookup |
| VAT registration number | Business sellers in EU | VIES validation required |
| Date of birth | Individual sellers only | Government-issued ID |
| Business registration number | Business sellers | National business registry |
| Financial account (IBAN/bank) | All sellers receiving payouts | Bank account confirmation |
VAT validation as a DAC7 requirement
For EU-based business sellers, DAC7 explicitly requires you to verify the VAT registration number. This is not a checkbox exercise — you must confirm the number is valid in the VIES system and document the validation result and date. Unverified or invalid VAT numbers on a DAC7 report expose the platform to penalties from the national tax authority.
Annual reporting obligations
- →Report deadline: 31 January of the year following the reporting period (e.g., January 31, 2025 for 2024 data)
- →Report to: your national tax authority, which then shares data with other EU member states
- →Excluded sellers: those with fewer than 30 transactions AND less than €2,000 in total consideration in the calendar year
- →Notification to sellers: you must notify each seller of the data you have reported about them by the same deadline
- →Record retention: keep the underlying data for 10 years
Implementation approach for developer teams
The practical approach is to collect VAT numbers during seller onboarding and validate them immediately via VIES. Store the validation result and timestamp alongside the seller record. Re-validate quarterly or on each payout cycle. At year-end, generate the report from your seller data, flag any sellers with invalid or missing VAT numbers for manual review, and submit to your national authority in the required XML format (typically based on the OECD Common Reporting Standard schema).
Frequently asked questions
What is DAC7?
DAC7 is EU Council Directive 2021/514, which requires digital platform operators (marketplaces, rental platforms, gig platforms) to collect, verify, and annually report seller data — including VAT numbers — to national tax authorities. The data is then shared across all EU member states to help tax authorities identify underreported income.
Does DAC7 apply to my SaaS product?
Only if your platform facilitates transactions between third-party sellers and buyers. Pure SaaS products that sell their own software directly to customers are not in scope. If you run a marketplace where sellers list goods or services and buyers purchase through your platform, DAC7 likely applies if you have 30+ sellers or facilitate €2,000+ in annual transactions.
What happens if I do not comply with DAC7?
Penalties vary by member state but typically include fines per unreported seller, percentage penalties on under-reported transaction values, and in serious cases, enforcement action against the platform operator. National tax authorities are actively cross-checking marketplace data against VAT returns, so non-compliance is increasingly likely to be detected.
When are DAC7 reports due?
Annual reports are due by 31 January of the year following the reporting period. The first reporting period was 2023, with first reports due 31 January 2024. Some member states granted extensions for the first year, but from 2025 onward the 31 January deadline is firm in all EU member states.
Must I validate seller VAT numbers in real-time or just at onboarding?
You must be able to report a valid, verified VAT number in your annual DAC7 submission. Best practice is to validate at onboarding (to catch typos immediately) and re-validate at least annually before your report deadline. If a VAT number has become invalid, you must note this in your report and flag it for the relevant tax authority.
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Related resources
Related terms
EU VAT Number
A unique identifier issued by a national EU tax authority to businesses registered for value added tax. It enables zero-rate treatment on cross-border B2B transactions and is the basis for all EU VAT compliance.
VIES (VAT Information Exchange System)
The EU Commission's official real-time system for validating VAT numbers across all 27 member states. It queries national tax databases and returns the registration status, company name, and address of any EU-registered business.
Intrastat
The EU system for collecting trade statistics on goods moved between EU member states. Required for businesses that trade physical goods above national thresholds. Does not apply to digital services or SaaS. Distinct from VAT reporting.