TL;DR
DAC7 (Council Directive (EU) 2021/514) applies to any digital platform with EU resident sellers, including platforms established outside the EU. If you operate a contractor marketplace, gig platform, rental platform, or any digital service that facilitates payments to EU resident sellers, you must collect 22 data points, complete due diligence by 31 December each year, and report to a single EU member state by 31 January of the following year. The exclusion threshold is fewer than 30 sales transactions AND not more than 2,000 euros during the reporting period, with both conditions required. Penalties are set per member state. In Ireland, late reporting carries an initial 19,045 euros plus 2,535 euros per day. This guide walks through what US companies need to know.
What is DAC7?
DAC7 is the seventh amendment to the EU Directive on Administrative Cooperation in the Field of Taxation. The formal citation is Council Directive (EU) 2021/514 of 22 March 2021, amending Directive 2011/16/EU. It entered into force on 1 January 2023 and requires reporting platform operators to collect, verify, and report information about reportable sellers that perform relevant activities through the platform.
The directive responds to a regulatory gap. EU tax authorities had no systematic visibility into income earned by EU residents through online platforms, especially marketplaces, gig platforms, and short-term rentals. DAC7 closes that gap by making platforms the data collection point, then routing data to the seller’s resident member state through an automatic exchange.
Does DAC7 apply to a US company?
Yes if the US company operates a digital platform that meets the directive’s definition and facilitates relevant activities by EU resident sellers.
A reporting platform operator is any entity that contracts with sellers to make all or part of a platform available to them. A platform is software, including a website or mobile application, that allows sellers to connect with users to carry out a relevant activity. If your software facilitates the contract between a contractor and a client, holds consideration, or pays the contractor, you are likely a reporting platform operator.
Non-EU platforms with EU resident sellers fall within DAC7’s scope unless they qualify as a Qualified Non-Union Platform Operator. The latter status requires an equivalent reporting arrangement between the operator’s home jurisdiction and the EU. As of 2026, the United States does not have such an arrangement for DAC7 purposes. US platforms therefore must register in a single EU member state and report through that state.
What are the four relevant activities?
The directive identifies four relevant activities. Any one of them triggers reporting if performed by an EU resident seller through the platform:
| Relevant activity | Examples |
|---|---|
| Sale of goods | Marketplaces selling physical goods |
| Rental of immovable property | Short-term and long-term property rentals |
| Personal services | Contractor marketplaces, gig platforms, freelancer payment platforms |
| Rental of any mode of transport | Car-sharing, bike-sharing platforms |
Personal services are defined broadly. The directive captures time- or task-based work carried out at the request of a user, whether online or offline. Software development contracts paid through a platform fall within personal services. So does design work, content creation, marketing, and consultancy.
For US founders running contractor management or payment platforms, the relevant activity will almost always be personal services. If you are unsure whether your platform falls within scope, Omnivoo’s contract management product handles this analysis as part of standard onboarding for contracts with EU resident contractors.
What sellers are excluded?
A seller is excluded from reporting only if both of the following are true during the reporting period:
- The seller facilitated fewer than 30 relevant activities by sale of goods, AND
- The total consideration paid or credited did not exceed 2,000 euros
This exclusion is narrow and applies to the sale of goods. Personal services have no equivalent transaction-count exclusion under the directive. Practically, any EU resident contractor receiving payment through your platform for personal services is reportable.
There are also categorical exclusions. Governmental entities are excluded. Entities with publicly traded stock are excluded. Hotel chains and similar high-volume immovable property providers are excluded above thresholds set by the directive.
What data points must a platform collect?
The directive requires platforms to collect and verify identifying and financial data for each reportable seller. The required elements include:
For individual sellers:
- Legal first and last name
- Primary address
- Tax identification number (TIN) and the issuing member state
- VAT number if applicable
- Date of birth
For entity sellers:
- Legal name
- Primary address
- TIN and issuing member state
- VAT number if applicable
- Business registration number
- Permanent establishment details if any
For each seller, transactional data:
- Financial account identifier used to credit consideration
- Holder name of the financial account if different from the seller
- Total consideration paid or credited each quarter
- Number of relevant activities each quarter
- Fees, commissions, or taxes withheld by the platform each quarter
Additional fields for immovable property rentals:
- Property address
- Land registration number if available
- Number of days rented per property
- Property type
Platforms must verify the TIN against authoritative EU registries, including VIES for VAT numbers. Verification is a directive requirement, not just a best practice.
Reporting timeline
DAC7 follows an annual cycle.
| Date | Action |
|---|---|
| 1 January | Reporting period begins |
| 31 December | Reporting period ends. Due diligence must be complete |
| 31 January (following year) | Report due to the member state of registration |
| End of February (following year) | Member state forwards data via the automatic exchange |
The first reporting period covered calendar year 2023, with reports due 31 January 2024. The 2026 cycle covers activity in calendar year 2025, with reports due 31 January 2026.
Member state registration for non-EU platforms
A non-EU platform must register in a single EU member state. That state becomes its reporting authority for DAC7 purposes. The platform files one report with that state covering all EU resident sellers across all 27 member states. The state then routes data to each seller’s home state through the automatic exchange of information.
Choosing the member state matters. Each state operates its own reporting portal with different technical specifications, language requirements, and customer support. Common choices for US platforms include Ireland (English-language interface) and the Netherlands (developer-friendly XML schema). The state of registration cannot be changed casually. A platform that registers in Ireland and later wants to switch to the Netherlands must deregister and re-register, which raises questions for the tax authority of both states.
Penalties
The directive requires penalties to be effective, proportionate, and dissuasive. Each member state sets its own amounts. As of 2026:
| Member state | Penalty structure |
|---|---|
| Ireland | 19,045 euros initial plus 2,535 euros per additional day of non-compliance |
| Germany | Up to 50,000 euros per violation (Plattformen-Steuertransparenzgesetz) |
| France | 50,000 euros for missed registration, 10 euros per non-reported seller |
| Spain | 200 to 600 euros per omitted data point with caps |
Repeat or systemic non-compliance can also trigger administrative measures including suspension of platform registration in the member state, which would prevent the platform from operating legally within DAC7’s framework.
Practical compliance steps for a US platform
If you operate a US-based platform with EU resident sellers, the practical compliance work breaks into five phases.
1. Scope analysis. Determine whether your platform meets the reporting platform operator definition. Document the analysis. If your platform only routes information without holding consideration or facilitating the contract, you may not be in scope.
2. Seller residency identification. Establish a process to identify each seller’s tax residency. This is typically based on primary address and TIN issuing state. Build the verification into onboarding.
3. Data collection at onboarding. Update onboarding flows to collect all required data points before payouts. Late collection creates compliance gaps you cannot retroactively fix.
4. Member state registration. Register as a non-Union platform operator in your chosen member state. Most states allow online registration through their tax administration portal.
5. Annual reporting. Build or buy a DAC7 reporting system that generates the required XML schema for your member state. Test against the schema each year because formats are updated.
For a contractor platform handling 50 or 500 EU contractors, building all of this in-house is expensive and easy to get wrong. Omnivoo’s contract management product handles EU resident contractor onboarding with the data collection required for DAC7 already built in.
DAC7 vs US 1099 reporting
These are parallel obligations. They do not substitute for each other.
| Aspect | DAC7 | US 1099-NEC |
|---|---|---|
| Authority | EU member state tax authorities | IRS |
| Subjects | EU resident sellers | US persons receiving non-employee compensation |
| Threshold | Generally no threshold for personal services | 2,000 USD for 2026 under OBBBA (was 600 USD) |
| Filing deadline | 31 January annually | 31 January annually |
| Form | XML schema per member state | Form 1099-NEC |
| Penalty | Set per member state | Set per IRS schedule under IRC 6721, 6722 |
If you pay both US contractors and EU contractors through your platform, you have two parallel reporting obligations. The same calendar drives both. For a 2025 reporting year, both DAC7 reports and 1099-NEC forms are due 31 January 2026, though the 1099-NEC deadline lands on a Saturday and shifts to 2 February 2026 per IRS practice.
What to do in 2026
If you have not yet registered as a non-Union platform operator and you facilitated payments to EU resident sellers in 2025, you are behind. The 31 January 2026 deadline has passed for the 2025 reporting year. Your immediate priorities:
- Register in your chosen member state now
- File the late 2025 report and pay applicable penalties
- Build systems for the 2026 reporting cycle, which begins capturing data 1 January 2026 and is due 31 January 2027
- Audit your contractor onboarding flows to ensure all DAC7 data points are captured at the start
How Omnivoo Contract Management helps
DAC7 is a structural requirement. It assumes a platform has clean seller data, verifiable TINs, financial account identifiers tied to payouts, and quarterly transaction summaries. Building those data flows from scratch takes engineering investment that most growth-stage companies do not have ready.
Omnivoo Contract Management is an end-to-end product for global contractor agreements and payments. EU resident contractors onboard with the full data set DAC7 requires, including TIN, VAT number, and primary address with verification. Every payment is captured with the data structure needed for DAC7 reporting, including consideration amounts by quarter and platform fees. When you need to generate a DAC7 report, the data is already in the structure your member state expects. Pricing is a flat $49 per finalized contract with transaction fees passed through at cost. No per-seat licensing. No platform fees. See pricing.
Talk to our team about EU contractor onboarding and DAC7-ready data capture. Get in touch.