Netherlands: Update on bill to implement EU Directive on reporting obligations of digital platforms (DAC7)

Reporting obligation for digital platform operators, to provide the Dutch tax authorities with information about “sellers” on their platform

Reporting obligations of digital platforms

A bill (the “EU Directive on Information Exchange in the Digital Platform Economy (Implementation) Act”) was presented in March 2022 to the Lower House of Parliament.

The bill would, among other things, introduce a reporting obligation for digital platform operators, to provide the Dutch tax authorities with information about certain users (“sellers”) on their platform—an obligation stemming from an EU Directive (Council Directive (EU) 2021/514 (“DAC7”)). The measures would be effective for financial years as of 1 January 2023, with a first reporting deadline of 31 January 2024.

What is DAC7?

The digitalization of the economy and the emergence of digital platforms has changed many business sectors and resulted in a shift from traditional labor relations based on employment contracts to the provision of services on an independent basis. There is, thus, a risk that the income sellers realize via digital platforms is not fully reported.

DAC7 is a uniform reporting obligation for platform operators, stemming from the need for tax authorities to obtain more transparency about the income sellers generate via digital platforms. DAC7 is also intended to introduce a uniform EU-wide reporting obligation in order to reduce the administrative burden for platform operators.

The reporting obligation requires reporting platform operators to collect and verify data and information from certain sellers.  Reporting platform operators would then report this information on an annual basis to the tax authorities of an EU Member State and to the sellers so that they are aware of which information has been provided. This information would subsequently be exchanged among tax authorities within the EU, depending on where the seller is resident or where the immovable property is located.

Who falls under the DAC7?

The obligation to collect, verify and report information applies to both EU and non-EU platform operators. The reporting obligation applies to both cross-border relevant activities and domestic activities. Non-EU platform operators are digital platforms that are not residents of an EU Member State, but the sellers using the platform do, however, have an EU nexus. An EU nexus means that the sellers are residents of an EU Member State or rent immovable property that is located in an EU Member State.

Reporting platform operators must provide information about the sellers on digital platforms. These are sellers that, during the reporting period, are registered on the platform and perform a relevant activity.

A “relevant activity” is defined as follows:

  • The rental of immovable property
  • The performance of a personal service
  • The sale of goods
  • The rental of any mode of transport

These activities must be performed for a consideration, the amount of which is known or reasonably knowable by the reporting platform operator.

The term “relevant activity” does not include activities that are performed by a seller in the capacity of employee of a reporting platform operator, or by an employee of an entity related to the reporting platform operator.

There are a number of exceptions to the term “seller” which means, for example, that no information has to be shared about listed companies or entities related to them that sell via digital platforms. Several thresholds apply to reduce unnecessary compliance costs—for example for small sellers, for which the reporting platform operator during the reporting period has facilitated less than 30 relevant activities and whose total consideration for these activities did not exceed €2,000. The reporting obligation does not apply to these sellers.

Which information must be shared?

There are three categories of information to be reported:

  • Information about the reporting platform operator itself (for example the registered office address, the tax identification number (TIN) and the business name of the platform)
  • Information about the reportable sellers, with the information to be provided distinguishing between sellers that rent immovable property and sellers that perform other relevant activities
  • Information about the consideration(s) and associated relevant activities and (if applicable) the address and land registration number of the immovable property

Reporting deadlines

The reporting platform operators falling under the reporting obligation must provide the information to the tax authorities no later than 31 January of the year following the reporting period. A reporting period corresponds to the calendar year covered by the report. The reporting obligation applies for the first time as of 1 January 2023, with a first reporting deadline of 31 January 2024.

For sellers that were already registered on 1 January 2023, the deadline for complying with the collection and verification requirements has been extended until 31 December2024.

Not having the correct information about a seller may result in the platform operator being obliged to close the account of that seller, which means the seller can no longer use the platform.


If a failure to comply with the obligations is due to the intent or gross negligence of a platform operator, an administrative penalty up to a maximum of €900,000 may be imposed on the platform operator, as well as prosecution.

The “Explanatory Memorandum” to the bill notes that a penalty must be proportionate and that, depending on the facts and circumstances, must be weighed by the tax inspector; therefore, there could be a substantial reduction of the penalty amount. Besides penalty-reducing circumstances, there may also be aggravating circumstances, such as repeat offenses.

Changes as a result of internet consultation

As a result of the internet consultation that ran from 8 October 2021 through to 9 November 2021, the explanatory notes to various matters were supplemented. Article-by-article explanations were expanded, including for personal services, series of transactions, and the collection and verification requirements, and examples were added to several definitions.

Not all the questions raised in the internet consultation were followed-up. For example, it is still not entirely clear which actions (or failure to act) are subject to penalties. A clarification in the Explanatory Memorandum explicitly states that the Netherlands will not impose any further or additional requirements for the reportable information than the requirements included in the Annex to the EU Directive. In addition, it is stated that both current and future interpretations by the OECD will be followed for the purposes of the obligations that will be included in the International Assistance in the Levying of Taxes Act (Wet op de internationale bijstandsverlening bij de heffing van belastingen—WIB) as a result of the bill. With regard to the interpretation of terms, the Explanatory Memorandum refers in various places to the OECD’s Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy [PDF 1.39 MB]

Other changes to the bill

In addition to the introduction of a reporting obligation for platform operators, several other changes are now being proposed with a view to further intensifying the cooperation between tax authorities, for example with regard to joint audits.

KPMG observation

The reporting obligation under DAC7 must be transposed into Dutch legislation by 31 December 2022. Although the first reporting deadline is 31 January 2024, platform operators need to consider starting their work on this new reporting obligation now, so that as from 1 January 2023, the required information can be collected and verified in the prescribed manner.

Data management plays an essential role in this, and questions to consider are:

  • To what extent is all the reportable data available?
  • Do sellers still have to provide additional data so that the reporting obligation can be complied with?
  • How should the verification of data be organized?

Read an April 2022 report prepared by the KPMG member firm in the Netherlands


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