Why missing DAC7 data Is a compliance risk
If your platform is approaching the 31 January DAC7 deadline and you have identified missing or incorrect seller data - such as unverified TINs or incomplete addresses - you still have options. This post walks through the four steps to collect, correct, and submit your data before the deadline.
Missing data is more common than platforms expect - sellers often provide incorrect TINs at registration, or fail to update their details when they move countries. DAC7 gives platforms a clear process to follow: verify, contact, re-verify, and report. Submitting a report with noted gaps is always better than missing the deadline entirely.
Step 1: Verify Your Sellers' TIN and VAT Numbers
Of course, the first step would be to verify your sellers’ Tax Identification Numbers (TIN) and VAT numbers using the EU's free VIES tool. Upon doing this, you might realize that some of the data you have is incorrect. If so, proceed to step 2.
Step 2: Reach Out to Your Sellers
The next step is to contact your sellers as soon as possible. Remember, people take time to go through their emails and may take a few days to reply. Additionally, sellers from certain markets may be apprehensive about sharing private information such as their personal TIN. This is why effective and clear communication is crucial. Here’s a template to help you request the necessary information and documents:
Dear [Seller's Name],
In the process of compiling our DAC7 report, we have identified some discrepancies in your data. To avoid any tax-related issues, please provide the following information:
[list specific data required]
If there's any confusion, please also provide a copy of your valid government-issued ID or relevant tax documents. This step will help confirm the authenticity of the data and reduce the risk of errors in our reporting.
We appreciate your immediate attention to this matter and are here to assist you if you have any questions. Thank you!
Best regards,
[Your Name]
Step 3: Update and Verify the New Data Collected
Once you receive the updated information from your sellers, thoroughly verify it. If correct, update your records immediately. If there are still discrepancies, don’t hesitate to respond to their email for further clarification or request additional documentation such as a valid government-issued ID or relevant tax documents to ensure everything is correct and complete.
When verifying TIN numbers, use the EU VIES system for VAT numbers. Acceptable supporting documents for TINs that cannot be verified digitally include: a government-issued ID showing the tax number, an official tax registration certificate, or a recent tax return document. Keep a record of every document received - this documentation protects your platform if the data is later challenged.
Step 4: Submit Your Reporting!
Finally, with all the correct data in place, you're ready to submit your DAC7 reporting. Make sure to review all the information one last time before submission to avoid any last-minute errors.
Meet your DAC7 deadline with confidence
Handling missing or incorrect DAC7 data can seem overwhelming, especially with a looming deadline. However, by following these structured steps and maintaining clear communication with your sellers, you can mitigate this obstacle easily.
If you want to avoid this situation next year, Gigapay automates DAC7 seller data collection and TIN verification from the point of onboarding - so your data is accurate year-round, not just before the January deadline. See how it works.
FAQ
Q: What should I do if my platform is missing seller TIN data before the DAC7 deadline?
A: First, verify the TIN data you do have against EU or member-state verification registers to confirm what is incorrect or missing. Then immediately contact the affected sellers requesting the correct information. Provide them with a clear explanation of what is needed and why, and give them a specific response deadline. Once you receive updated data, verify it again before including it in your report.
Q: What happens if I submit a DAC7 report with missing or incorrect data?
A: You should still submit your report by the 31 January deadline even if some seller data is incomplete. Submitting late is generally treated more severely than submitting with noted gaps. Document which data points are missing, the steps you took to collect them, and communicate transparently with your national tax authority about the situation. Penalties are at the discretion of each member state.
Q: How should I contact sellers who haven't provided their DAC7 information?
A: Contact sellers as early as possible before the deadline - sellers often take several days to respond to emails, and some may be apprehensive about sharing tax information. Use clear, straightforward language explaining what data is needed and why it is legally required. Reference the specific documents accepted (e.g. government-issued ID, official tax documents) and set a clear response deadline.
Q: How do I verify updated seller data once I receive it?
A: Verify TIN numbers against the free EU VIES system or the relevant member state's tax authority register. For VAT numbers, use the EU VAT Information Exchange System (VIES). If the data still cannot be verified digitally, request official documentation such as a government-issued ID or tax registration certificate before including the data in your DAC7 report.
Q: Can I exclude sellers from my DAC7 report if they refuse to provide data?
A: Under DAC7, if a seller refuses to provide required data after two formal reminders, you are entitled to terminate their account. You should still report the seller in your DAC7 submission, noting that you were unable to collect the required information despite two requests. Tax authorities may then pursue the individual directly. Do not simply omit sellers - document every step you took to collect the data.
