DAC7 Reporting for digital platforms: Requirements and identity verification
DAC7 is an EU directive requiring online platforms to report sellers' income to tax authorities. This rule addresses the difficulty of tracking cross-border income, a challenge that has grown with the digital economy. While marketplaces, rental platforms, and the gig economy make it easy for people to earn money online, they also make tax reporting harder for authorities. DAC7 aims to solve this by creating new reporting obligations for many platform operators.
This post breaks down what DAC7 reporting entails, why it matters for your platform, and how to meet its strict identity verification requirements.
What is DAC7?
DAC7 is part of the EU’s broader Directive on Administrative Cooperation (DAC). It mandates that digital platform operators must collect, verify, and report information about sellers earning income through their services.
The reason for this is simple: tax authorities need reliable data about income generated on online platforms, and platforms are now responsible for supplying it.
Who needs to report under DAC7?
The rules apply to any digital platform, EU-based platforms and non-EU platforms with EU users, that enables users to earn income through the following activities:
- Rental of real estate (including short-term rentals)
- Personal services (e.g., gig work, freelancing, tutoring)
- Sale of goods (e.g. sale of second-hand or used items)
- Rental of vehicles (cars, bikes, boats, etc.)
If your platform connects sellers with buyers or service providers with clients, it almost certainly falls under DAC7 unless you meet very narrow exemption criteria.
What information must platforms report under DAC7?
To meet DAC7 obligations, platform operators must collect and report detailed user data on “reportable sellers”. This typically includes:
Identifying information
- Full name or legal entity name
- Primary address
- Date of birth (for individuals)
- Tax Identification Number (TIN) and issuing country
- VAT number (if applicable)
- Company registration number (for businesses)
Financial and transactional data
- Total consideration paid or credited per quarter
- Fees, commissions, or taxes withheld by the platform
- Number of transactions
- Financial account identifiers
- Property details for real estate rentals
This data must be submitted annually to the relevant EU tax authority, which then shares it across the EU under the automatic exchange of information framework. The reporting deadline for platforms is 31 January of the year following the calendar year being reported.
DAC7 reporting requirements: the identity verification challenge
One of the biggest shifts DAC7 introduces is the heightened responsibility placed on platforms to identify and verify their users. This is no longer simple onboarding; it is a compliance-critical process.
Platforms must:
- Collect mandatory user information.
- Verify its accuracy using reliable, independent sources.
- Monitor data for changes and keep it current.
- Securely store user records for audits.
- Report data annually in a standardised format.
This is where many platforms struggle in practice:
- Users submit incomplete or inconsistent details.
- Tax Identification Number (TIN) formats vary widely across countries.
- Validating cross-border sellers is complex.
- Manual checks are inefficient and do not scale.
To overcome these hurdles, platforms must adopt more robust, KYC-style onboarding workflows that blend automation with reliable data verification. For high-growth platforms competing in the EU market, non-compliance isn’t an option.
How Signicat supports DAC7 compliance and reporting
It may feel that DAC7 reshapes the responsibilities of digital platform operators by shifting part of the tax-compliance burden onto them. While the regulation introduces additional work, especially around identifying and verifying end users, it also promotes transparency and levels the playing field across the digital economy.
Signicat supports platform providers in achieving efficient ways to cover your DAC7 reporting obligations. We do that by providing tools and technology to collect mandatory user information and remotely verify the identities of platform users, as well as to verify & monitor address and country of residence information that is needed for reporting.
- Identities can be verified through more than 35 trusted eID identity schemes from various governments, bank consortia, trade organisations and others.
- Identity document and biometric verification solutions like Signicat VideoID and ReadID, can be used to verify the user identity in case eIDs are not available.
- Identity data obtained through eIDs or ID documents verification can be enriched with address, country of residence or several other data points from 200+ risk and identity data sources supported by Signicat platform.
Leading platform providers and mobility companies already use Signicat to build compliant and scalable onboarding and reporting workflows.
If you’d like to discuss how to prepare your platform for DAC7, get in touch with our experts.