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MRDP FAQs

Q: What is MRDP?

The Model Reporting Rules for Digital Platforms (MRDP) were developed by the OECD, in light of the rapid growth of the digital economy, and in response to calls for a global reporting framework in respect of activities being facilitated by digital platforms, in particular in the sharing and gig economy.

In addition to the MRDP, the OECD also developed a module for the reporting of sales of goods through digital platforms, as well as an automatic exchange framework to ensure that tax administrations can access information on their taxpayers that has been collected pursuant to the MDRP.

The OECD maintains and regularly updates this list of frequently asked questions on the application of the MRDP.

DAC7 FAQs

Q: What is DAC7?

DAC7, or Directive on Administrative Cooperation (DAC) 7, is a European Union directive aimed at enhancing tax transparency and cooperation in the digital realm. It focuses on gathering and reporting data about natural and legal entities, specifically related to their earnings, through digital platforms and marketplaces. The directive aims to promote transparency, reduce tax evasion risks, and create a level playing field for businesses operating in the digital economy.

Q: Who needs to comply with DAC7?

The directive defines a Platform Operator as an online marketplace, including mobile applications, that:

  1. Connects buyers and sellers of relevant activities, AND
  2. Has functionality to facilitate payment between those buyers and sellers.

While DAC7 is an EU Directive, please note that a Platform Operator is not required to be located and/or operated directly out of the EU in order to have a reporting obligation. To the extent a Reporting Platform Operator is not based in the EU, registration in one or more EU Member States must be completed. The relevant Member States will then typically issue an identification number to the Platforms Operator, which is used to complete any required reporting.

Note – The definition of a Reporting Platform Operator generally does not include software that functions solely as a payment processor or solely as an advertisement platform that does not facilitate payment between buyers and sellers.

Q: What is a Relevant Activity?

Under DAC7, digital platform operators are required to report sellers or gig workers who fall into one or more of what is considered as “relevant activity” under the rules. That relevant activity can include the following:

  • Rental of immovable property, including both residential and commercial property, as well as any other immovable property and parking spaces
  • Personal services
  • The sale of goods
  • Rental of any means of transportation

Q: What kind of data do you need to collect, verify and report?

Digital platforms and marketplaces will need to be prepared to collect and report extensive data to the relevant tax authorities.

Regarding the Seller, this information includes, but is not limited to:

  • Seller name, addresses, tax identification numbers and dates of birth 
  • VAT identification numbers 
  • Business registration numbers 
  • EU member state of residence
  • Financial account identifier

With respect to the platform activity, this information includes, but is not limited to:

  • Number of activities and transactions
  • Total consideration paid or credited per year
  • In instances where the marketplace has withheld any funds each year, any taxes, commissions, or fees

For platforms that facilitate the rental of immovable property, this information may also include:

  • The address and land registration number for each property listing 
  • The number of days each property was rented
  • Address and land registration number of each property 

Note – The marketplace operator of the platform will be held responsible for the accuracy and reliability of the collected data.

Q: Are there any prescribed due diligence rules?

Currently, there is no prescribed manner of collecting the relevant information or required documentation. The rules simply indicate that platforms will need to collect this tax residency information by the end of each reporting year.

Q: Who is reportable?

Once information is collected on a seller, Platform Operators will need to determine whether the seller is eligible for reporting, typically based on their tax residency. However, for platforms that facilitate the rental of immovable property, this analysis is typically based on the location of the property.

The directive defines a Reportable Seller as any Active Seller that is an EU Member State resident individual or entity registered on the platform. An Active Seller is any seller that either provides a Relevant Activity during the Reportable Period or is paid or credited consideration in connection with a Relevant Activity during a Reportable Period.

Note that the following are considered Excluded Sellers under the directive, and thus, do NOT meet the definition of a Reportable Seller:

  • Governmental entities
  • Entities with stock traded on an established securities market (public companies)
  • High-frequency real estate renters with more than 2,000 rental transactions in a year
  • Those selling goods that have fewer than 30 transactions in the year, the value of which do not exceed 2000 euros in total, referred to as Casual Sellers (Note – this exception does not apply to those selling services)