With the DAC7 reporting deadline approaching on 31 January 2027, digital platforms have several options for managing their reporting obligations. One option is to build a direct integration with the local tax authority yourself. Another is to use a dedicated compliance solution. Some countries also offer a third option. In the Netherlands, for example, platforms with a small amount of data can use the free DAC7 portal for manual submissions. Which option is the right fit for your business?
The answer depends on more than the price you are willing to pay. It also depends on the size of your platform, the amount and complexity of your data, the systems you use, your internal technical resources and the operational burden each option creates.
Let’s look at the three options and their pros and cons, one by one.
Option 1: Use a free reporting portal
The free portal can be a perfectly sensible option for platforms with a small number of reportable sellers and relatively straightforward data. There is no software licence or development project involved, making it attractive when the reporting workload is genuinely small.
However, it is important to remember that the portal mainly solves the submission part of DAC7 compliance. Your team still needs to collect and verify the required seller information, identify missing or incorrect data, contact sellers when information is incomplete or needs to be checked, prepare the data in the required format and deal with possible corrections. You also need to provide sellers with the relevant information after reporting. This means that the real cost is the time your team spends managing the process manually.
As a rough planning estimate, a fully manual process can take around 20–55+ minutes per seller, depending heavily on the completeness and reliability of your existing data, seller responsiveness, complexity and the amount of correction work required. For 20 sellers, this translates to roughly 7-18 hours of work, which may be perfectly manageable for a small platform. At 1,000 sellers, however, the same process could require 333-917 hours, equivalent to around 42-115 full working days if one person were doing the work full-time.
The free portal can therefore be an excellent solution for small platforms, but its feasibility changes quickly as seller volumes increase. It is best suited to platforms with limited seller volumes, good data quality and relatively straightforward reporting needs.
Option 2: Build your own DAC7 solution
The second option is to build the reporting process yourself. This can be attractive for platforms with a strong engineering team, complex internal systems and a need for compliance to be deeply integrated into the existing platform. One of the main advantages of building your own solution is control. You can decide exactly how data is collected, validated and reported, and integrate the process directly into your existing systems and workflows. This flexibility can be particularly valuable for larger platforms with complex data structures or specific business requirements.
When considering this option, however, it is important to remember that building a DAC7 solution is more than creating a simple XML export and connecting it to the local tax authority. A complete solution needs connections to all your relevant systems, such as your platform, PSP, CRM and ERP. It should not only collect data, but also synchronize seller information, validate it, identify missing fields and generate the required reporting format. And if you want to automate the full compliance process, it should also support seller outreach and TIN collection, direct submission, corrections and resubmissions. Otherwise, you may still end up with many of the manual tasks you were hoping to eliminate.
You also need to maintain the solution. If reporting specifications, validation rules or legislation change, your team needs to understand the changes, update the system, test it and deploy the update. The same applies when you expand into new jurisdictions or need to support additional reporting requirements.
This means that the real cost of building your own solution is higher than the initial development project. As an indicative estimate, development alone could easily reach €30,000 or more, depending on your existing infrastructure, data quality, integrations and the level of automation you want. On top of that, you need to account for ongoing maintenance, engineering capacity and future regulatory changes.
For larger platforms with substantial technical and financial resources, complex internal infrastructure and a strong reason to retain full control, building your own solution can therefore make good sense.
Option 3: Buy a dedicated compliance solution
The third option is to use a dedicated compliance solution. Instead of building the infrastructure yourself, you use software that, depending on the solution you choose, is designed to manage the compliance lifecycle.
The important distinction here is that not every compliance solution automates the same amount of work. Some tools primarily generate a report, while others cover the process from data collection through to submission and corrections.
A strong solution should be able to integrate and orchestrate your existing data sources, identify missing information, automate seller outreach and TIN collection, validate data, resolve issues before submission, generate the correct reporting format, submit reports and handle corrections and resubmissions. It should also keep up with regulatory changes and support the jurisdictions and reporting regimes relevant to your business.
This means the question should not simply be “Does it support DAC7?”, but rather “How much of the DAC7 process does it actually take off our hands?” For more guidance on what to look for when choosing a compliance solution, read our previous blog on how to choose the right compliance solution for your business.
This option can be particularly attractive for platforms that have outgrown a free tool but do not want to invest significant resources in building and maintaining their own compliance infrastructure. It is also well suited to platforms where manual work is becoming significant, where technical resources are better spent on the core product, or where compliance is expected to expand across sellers, jurisdictions or regulations.
So, what solution suits you?
To put it simply, the three options mainly differ in who carries the operational and technical burden. With the free portal, your team carries most of it. With a self-built solution, your engineering and compliance teams carry it. With a dedicated solution, much of that work is shifted to the software provider.
If you have a small number of sellers and clean data, the free portal may be all you need. If you have the technical resources, sufficient budget and want full control, building can make sense. If manual work is already becoming a burden, or you expect to deal with multiple regulations and jurisdictions, buying a dedicated solution may be the more scalable option.
The right choice is ultimately the one that gives your platform the best balance between cost, control, effort and scalability.
