What is a digital platform/digital platform operator?
Relevant activities
Reportable sellers
Reporting obligations
Two levels of failure to report


The characteristics of the digital platform economy have proven to be quite challenging when it comes to the traceability and detection of taxable events (eg, tax fraud, tax evasion and tax avoidance) by tax authorities. On 22 March 2021, to extend the EU tax transparency rules to digital platforms, the Council of the European Union adopted EU Directive 2021/514, also known as "DAC7". DAC7 amends EU Directive 2011/16 on administrative cooperation in the field of taxation.

DAC7 imposes a new obligation on digital platform operators with presence in an EU member state (MS) to collect and report information regarding revenues generated by reportable sellers undertaking a relevant activity via their platforms. Subsequently, the MS must automatically exchange this information with other MSs.

In particular, the obligation to report lies with:

  • digital platform operators that:
    • are tax residents of an MS;
    • have been incorporated under the laws of an MS; or
    • have their place of management or a permanent establishment in an MS; and
  • foreign digital platform operators that:
    • facilitate the performance of relevant activities of reportable sellers who are residents of an MS; or
    • provide rental services for immovable property located in a MS.

What are digital platforms and digital platform operators?

According to DAC7, a digital platform is any software (including a website or a mobile phone application) that is accessible by users for the purpose of conducting a relevant activity. A digital platform operator is any legal person or arrangement in contract with sellers in order to make all, or part, of the platform available to them.

A digital platform which only allows for the processing of payments for relevant activities, or which only allows its users to list or advertise relevant activities and or which redirects a user to another platform will not fall within the scope of DAC7.

Legal persons or arrangements may also be considered as "excluded platform operators" if they can successfully demonstrate beforehand, and on an annual basis, that their entire business model does not involve reportable sellers.

Relevant activities

The definition of a "relevant activity" encompasses any activity that is performed for consideration and involves:

  • rental of immovable property;
  • provision of personal services;
  • sale of tangible goods; and
  • rental of any mode of transport.

Activities conducted by a seller (ie, an employee of the digital platform operator) during the course of its employment should not fall within the scope of DAC7.

Reportable sellers

A "reportable seller" is defined as any natural or a legal person or arrangement that has residence in a MS or that is involved in services of renting immovable property located in a MS, and that has been registered on the platform to conduct a relevant activity.

Government entities, publicly traded entities or entities that are related to an entity (the stock of which is regularly traded on an established securities market), are exempt from being considered as reportable sellers. Likewise, the reporting obligations do not apply where the platform operator has facilitated more than 2000 relevant activities within a reporting period by means of rental of immovable property (in respect of a property listing during the rental period) for a seller. This would mean, for example, facilitating large hotel or tour company bookings but not small Airbnb operators. The reporting obligations also do not extend to casual sellers where the platform operator facilitated less than 30 relevant activities by means of the sale of goods and for which the total amount paid or credited to the seller did not exceed a total of €2000 during the relevant reporting period.

Reporting obligations

According to DAC7, digital platform operators need to undertake extensive due diligence on reportable sellers, in order to collect and verify their identification, and to report this information annually to the MS in which they have been registered for this specific purpose.

In particular, the reportable information includes, among other things:

  • details of the reporting platform operator and the platform itself; and
  • personal details of the reportable seller, including:
  • the tax identification number;
  • value-added tax identification number;
  • residence;
  • overview of amounts paid or payable to sellers form the reportable activities;
  • platform fees; and
  • commissions or taxes withheld or charged by the digital platform operator during each quarter of the reportable period.

The reporting obligations extend beyond this where the relevant activity pertains to rental services of immovable property.

Any such information collected should be provided to the MS where the reportable seller resides, or to the MS in which the immovable property is located, no later than the 31 January of the relevant year following the reportable period.

These reporting obligations are indirectly imposed on the reportable seller as well. Reportable sellers are required to disclose information with the digital platform operator in order to open, maintain and trade through an account with the platform.

Two levels of failure to report

Digital platform operators
The consequences of non-compliance with the reporting obligations will be determined by each MS.

Reportable sellers
Failure to disclose required information with the digital platform operators might cause their account on the platform to be closed.


Although DAC7 does not affect the reportable seller's tax liability, it does add an increased screening element and supports a tax audit exercise by the tax authorities of MS on the basis of the information obtained through digital platforms.

To ensure compliance with DAC7, companies should perform an analysis of their business models and assess whether the new rules have a direct or an indirect impact on them and to what extent.

DAC7 has yet to be transposed into domestic law. However, it requires each MS to implement the reporting obligations by 31 December 2022, so as to require compliance by digital platform operators from 1 January 2023 onwards (first reporting period being 24 January 2024).

For further information on this topic please contact Adonis Zachariou or Theodora Alexandrou at Elias Neocleous & Co LLC by telephone (+357 25 110 110) or email ([email protected] or [email protected]). The Elias Neocleous & Co LLC website can be accessed at