In an era where digital platforms and crypto-assets are reshaping the global economy, the European Union’s directives on administrative cooperation in taxation—DAC7, DAC8, and DAC9—are pivotal in ensuring tax transparency and compliance. This article delves into the key considerations and implications of these directives, which target platform operators (DAC7), crypto-asset service providers (DAC8), and multinational enterprises (DAC9).
DAC7: Extending Tax Transparency to Digital Platforms
Background
DAC7, adopted on 22 March 2021, aims to extend tax transparency and automatic exchange of information rules to digital platforms. It requires platform operators to collect, verify, and report information about sellers conducting relevant activities through their platforms.
DAC7 acts as a tool for the automatic exchange of information, allowing the competent authorities of EU Member States to monitor the income derived by its residents through digital platforms. The competent authority receiving the data from the platform operators will share the information with other respective EU tax authorities.
Key Points
- Reportable Content and Automatic Exchange of Information: Digital platform operators must report information about sellers conducting activities such as the sale of tangible goods, rental of immovable property and any mode of transport, and supply of personal services.
- Scope: Includes improving information exchange between Member States, improving the rules for carrying out simultaneous controls, and providing a framework for joint audits.
Implications for Platform Operators
- Compliance Burden: Significant administrative load requiring comprehensive data collection and reporting systems.
- Legal and Operational Adjustments: Necessary modifications to existing processes and systems.
- Data Privacy Concerns: Ensuring strict compliance with data protection regulations.
- Cross-Jurisdictional Coordination: Enhanced collaboration for joint audits and information sharing.
Reporting Deadline
Platform operators must report the required information by 31 January of the year following the calendar year in which the seller is identified as a reportable seller. The first DAC7 deadline across the EU was 31 January 2024, with extensions in certain Member States.
Persons who fail to abide by the rules set out in DAC7 could face various forms of penalties, both financial and otherwise, such as the closure of the seller’s account and the withholding of payments.
DAC8: Tax Transparency Rules for Crypto-Asset Transactions
Background
DAC8 introduces reporting requirements for crypto-asset service providers, mandating the collection and verification of information on transactions involving EU resident clients.
Key Points
- Reporting Requirements: DAC8 mandates that crypto-asset service providers collect and verify the information on transactions involving EU resident clients. The competent authority of the Member State is subsequently required to convey such information to the competent authority of the Member State where the crypto-asset user is resident.
- Scope Extension: The directive extends the scope for exchanging advance cross-border rulings to include those concerning high-net worth individuals and on non-custodial dividends and similar revenue.
- Non-Tax-Related Information: DAC8 also introduces the possibility of exchanging information received under the DAC framework for non-tax-related purposes.
Reportable Information
DAC8 includes the following types of reportable transactions:
- Acquisitions against Fiat Currency;
- Disposals against Fiat Currency;
- Acquisitions against other Reportable Crypto-Assets;
- Disposals against other Reportable Crypto-Assets;
- Reportable Retain Payment Transactions which are defined as a Transfer of Reportable Crypto-Assets in consideration of goods or services for a value exceeding USD50,000 (or the equivalent amount in any other currency);
- Transfers to the Reportable User not covered by the points above; and
- Transfers effectuated by the Reporting Crypto-Asset Service Provider to distributed ledger addresses not known to be associated with a virtual asset service provider or financial institution.
Reporting Deadline
DAC8 was adopted on 17 October 2023 and must be transposed into domestic law by 31 December 2025, with provisions applied from 1 January 2026 (with some exceptions). The first information shall be reported in 2027 for 2026.
DAC9: Simplifying Filing Obligations Under Pillar 2 Directive
Background
DAC9 directive was proposed in 2024 by the Commission. Further amendments were made to the proposed directive, with the latest being on the 14 April 2025. DAC9 aims to help companies with their filing obligations under the Pillar 2 Directive. Pillar 2 aims to ensure a global minimum level of taxation for multinational enterprise groups (MNEs) and large-scale domestic groups (LSDGs) with a consolidated group revenue of at least Eur750 million. The established minimum effective tax rate is of 15%.
Key Points
- Centralised Filing: Multinational enterprise groups can file one single top-up tax information return for the entire group rather than multiple returns in the countries which it is based. The return will also help ensure that MNEs and LSDGs provide the same information in the same format, making it easier for them to fulfil their filing obligations and for tax authorities to assess and exchange it.
- Exchange Mechanism: Tax authorities of the Member States can share relevant sections of the top-up tax information return or other required information.
- Top-up Tax Information Return Template: A standard template for the top-up tax information return, ensuring alignment with the GloBE Information Return (GIR) published by the OECD.
Next Steps
DAC9 will be formally adopted by the EU Council and published in the Official Journal. Member States must implement DAC9 by 31 December 2025. MNEs are expected to file their first top-up tax information return by 30 June 2026, with information exchanged by 31 December 2026.
Conclusion: Embracing Transparency and Compliance
The DAC7, DAC8, and DAC9 directives represent significant steps towards enhancing tax transparency and compliance in the digital age. By understanding and adhering to these regulations, platform operators, crypto-asset service providers, and multinational enterprises can navigate the complexities of modern taxation and contribute to a fairer and more transparent global economy.
For more detailed guidance and updates on DAC7, DAC8, and DAC9, contact our tax team at Zampa Partners.
Stephanie Aquilina Galea
Tax Senior Team Leader
