The proposal to bring EU rules on administrative cooperation in the field of taxation (DAC Recast) into a single simplified text is a substantive and welcome step towards a smarter European rulebook. Codifying the successive Directives on Administrative Cooperation (DAC) into a single text and ensuring targeted simplification is exactly the approach European tech companies have been calling for.
Simplification on paper isn’t sufficient, it now needs to be delivered on the ground.
In the field of taxation, European tech companies face overlapping obligations, divergent national rules and ever-expanding reporting demands. Over half of European startups identify compliance as the single biggest threat to their operations, and two-thirds cite tax compliance as a major brake on growth. The DAC Recast is a genuine opportunity to change that, provided the political commitments it contains are turned into certainty.
Three priorities should guide the upcoming negotiations, highlighted in our new EUTA position paper on the DAC Recast.
✔ A stronger enforcement toolkit against non-compliant platforms. The proposal clarifies sanctions, adds an information-sharing mechanism for non-compliance cases, and enables simultaneous controls of operators with no EU presence. These measures have a direct, positive impact on the level playing field for every platform operating in Europe. Co-legislators should ensure these tools are used consistently and that the possibility of preventing persistently non-compliant operators from offering services in the EU is preserved as a credible deterrent.
✔ A clear principle against duplicative national reporting. The Recast establishes that Member States should not maintain disproportionate additional reporting obligations in the field the Directive covers. This is a major step towards ending the parallel, duplicative national regimes that pre-date DAC7. The provision should be maintained as proposed, so that legacy national reporting regimes are withdrawn and no new ones are adopted.
In several areas the Commission has moved in the right direction, but co-legislators now need to capitalise on the momentum and ensure a robust simplification effort.
⚠ Reporting thresholds: finish the job, including for services. The Recast removes the 30-transaction activity criterion for the sale of goods and raises the monetary threshold from €2,000 to €3,000. This is a genuine win for proportionality, which will encourage the resale of second-hand goods.
But services remain reportable from the very first euro, with no de minimis threshold. Platforms must collect, verify and report a full DAC7 data set for individuals performing a handful of activities, often below national income-tax thresholds, producing data of limited value to authorities relative to its cost. Co-legislators should confirm the new thresholds for goods and introduce an equivalent threshold for services.
⚠ A single verification and validation system: make it real, quickly. The DAC Recast creates a centralised and mandatory verification system, and allows the EU Digital Identity (EUDI) Wallet and government verification services to be used as verified identifiers under the “once-only” principle. This is an important step towards a single EU-wide verification mechanism. The mandatory nature of the tool, a key to simplification, should be preserved, while aligning transposition deadlines with the EUDI Wallet roll-out and improving its functionalities.
⚠ Complete the work on the harmonisation of scope and definitions. The proposal updates and clarifies some definitions, but stops short of an effort that would bring tangible changes for online platforms.
Co-legislators should finish the job with binding EU-level guidance on key concepts and mandate a single, EU-wide consolidated reporting framework with a common technical format. Any new changes in that space should bring legal certainty for online platforms and their users alike.
Three issues that are crucial to European tech companies are not yet addressed in the DAC Recast.
✖ Simplify the list of reportable information towards tax authorities. The current requirements amount to a disproportionate set of data points that is left unharmonised across Member States. Co-legislators should limit the reportable set elements necessary for tax authorities to identify and investigate practices if necessary, namely name, Tax Identification Number and address. This change will enable platforms to build one streamlined mechanism across the Single Market, and no longer 27 different systems.
✖ Extend the reporting deadlines to improve accuracy. The Recast maintains the existing reporting timelines for online platforms, even as they may increase the risk of incomplete or inaccurate reporting. Extending the deadlines, and introducing a formal correction mechanism, would materially improve accuracy of the tax information reported.
✖ Align data collection across the EU rulebook. The Recast doesn’t address the parallel and overlapping data collection efforts between DAC, the Digital Services Act and the Short-Term Rentals Regulation. This is a missed opportunity. Businesses, including many SMEs, should not have to supply near-identical data multiple times, under different timelines, to different destinations. Aligning the overlapping trader-information requirements across these frameworks would deliver a meaningful reduction in compliance costs.
This DAC Recast is a valuable opportunity, and needs to live up to its ambition. With this proposal and targeted additional steps, the co-legislators can turn this text into a decisive step for the future of tax reporting in Europe. A framework that lowers compliance costs without lowering standards, and that produces more actionable data for national tax authorities.