DAC8 and DAC7: Lessons from Platform Economy Reporting

DAC7, which requires digital platforms to report information about sellers using their services, provides valuable lessons for DAC8 implementation. This article examines what CASPs can learn from the DAC7 experience.

DAC7 Background

DAC7, effective from January 1, 2023, requires digital platform operators to collect and report information about sellers who use their platforms to provide services, sell goods, rent property, or invest. The information is exchanged between EU Member States to enable tax authorities to verify that platform sellers are declaring their income correctly.

Structural Similarities with DAC8

DAC7 and DAC8 share several structural features. Both require platform operators to collect identification data (including TINs) from users. Both require annual reporting in a structured XML format. Both involve automatic exchange of information between Member States. And both include look-back provisions for existing users.

Lessons for CASPs

CASPs can learn from the DAC7 experience in several areas:

TIN collection is hard. DAC7 platform operators found that collecting TINs from existing users was the most challenging operational aspect of compliance. User response rates were low, and significant effort was needed to achieve acceptable completion rates. CASPs should expect similar challenges and plan accordingly.

Early testing is essential. Platform operators that tested their XML generation systems early identified and resolved formatting issues well before the filing deadline. Those that delayed testing faced last-minute scrambles and errors.

Competent authority engagement pays off. Platforms that engaged early with their competent tax authorities to understand submission procedures, testing environments, and business rules had smoother first reporting cycles.

User communication requires effort. Explaining why platforms need TINs and self-certifications — and overcoming user resistance — required sustained, multi-channel communication campaigns.

Conclusion

DAC7's implementation experience provides a practical roadmap for DAC8. CASPs should study the lessons learned by DAC7 platform operators and apply them to their own compliance preparation.