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July 25, 2022

German Federal Ministry of Finance publishes draft DAC7 implementation bill

  • DAC7 is the latest update of the EU’s Directive on administration cooperation in the field of taxation and other EU Member States have already passed their respective implementation act or have published draft implementation bills.

  • Member States must transpose the Directive into national law by 31 December 2022.

  • The German draft DAC7 implementation bill sets forth due diligence procedures and reporting requirements for platform operators.

  • After promulgation of the law, according to the current wording, reporting platform operators will be immediately obliged to register with a competent authority of an EU Member State.

Executive summary

On 12 July 2022, the German Federal Ministry of Finance (BMF) published the draft implementation bill on the due diligence procedures and reporting requirements for platform operators – better known as DAC7, the latest update of the European Union’s Directive on administrative cooperation in the field of taxation (Directive 2011/16/EU). Other European Union (EU) Member States have already passed the national DAC7 implementation act. To date, there are draft implementation bills in the Netherlands, Spain, the Czech Republic, the Slovak Republic, Austria, France, Ireland, Luxembourg, Denmark, Italy and the United Kingdom. However, the German draft implementation act and especially its explanatory memorandum shed some new light on uncertainties around the interpretation of DAC7 by the EU Member States. The Member States must transpose the Directive into national law by 31 December 2022.

Detailed discussion


With the latest update of the EU-DAC, the EU intends to prevent tax fraud, tax evasion and tax avoidance. The DAC7 requires digital platform operators to report certain tax-relevant information to national tax authorities which can become part of the EU-wide automatic exchange of information.1 The EU rules align with the OECDModel Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy and the analogous 1099-K rules in the United States.

Registration and reporting obligations

In substance, the draft bill provides for an automatic exchange of information on certain data to be reported by the platform operators. However, the platform operators should only have to collect data on certain types of sales (so-called relevant activities). Specifically, the following activities are covered: (1) renting of immovable property; (2) personal services; (3) sale of goods; and (4) rental of any mode of transport.

However, platform operators whose activity is limited to: (1) processing payments in connection with a relevant activity; (2) listing a relevant activity or advertising a relevant activity by users; as well as (3) redirecting users to (another) platform are not in scope. The wording of the law, like the EU Directive, remains vague overall. Only the explanatory memorandum contains some clarifications that may facilitate the application of the law in practice. For example, Germany cites the provision of rights of use or labor and the trade in goods as examples of relevant activities that are subject to DAC7 reporting.

Furthermore, the prerequisite for a platform shall be that users can contact each other and conclude legally binding contracts via the platform. This may be regarded as more precise as compared to the respective EU provision which reads “…allowing sellers to be connected to other users for the purpose of carrying out a relevant activity, …”.

The aforementioned exceptions should therefore exclude price comparison sites or product search engines, according to the explanatory memorandum. Also of importance are the statements in the explanatory memorandum of the draft legislation that the platform must offer the possibility of concluding a legal contract electronically directly via the platform. Thus, the mere mediation of opportunities to conclude a transaction, such as in the form of a digital "noticeboard," where the relevant legal contract is concluded outside the platform infrastructure as a cash transaction or otherwise electronically, is not to be covered.

Switch-off mechanism

Generally, platform operators are in scope of the proposed German law if the operator is not deemed to be an excluded platform operator and the operator is resident for tax purposes in Germany; is incorporated according to German Law; or has a permanent establishment in Germany. Furthermore, platform operators fall under the German rules if they are not regarded as qualified platform operators and are not registered in another EU Member State. Qualified platform operators are, in short, platform operators in third countries which must follow their own national platform reporting obligations. In such cases, the national German obligations “switch-off.”


After promulgation of the law, according to the current wording, reporting platform operators will be immediately obliged to register with a competent authority of an EU Member State. The reporting platform operators have until 31 January of the year following the calendar year in which the provider was identified as a notifiable provider at the latest to make the actual notification. The first reportable year is to be 2023. In the event of non-compliance with the law, the draft bill includes provisions on fines, which classify various violations as administrative offenses.


For additional information with respect to this Alert, please contact the following:

Ernst & Young GmbH, Hamburg

Ernst & Young GmbH, Berlin

Ernst & Young LLP (United Kingdom), London

EY Belastingadviseurs LLP, Amsterdam

EY Société d'Avocats, Paris

EY Luxembourg, Luxembourg



  1. Council Directive (EU) 2021/514.

  2. Organisation for Economic Co-operation and Development.


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