What data marketplaces share with tax authorities — and how to reconcile it with your VAT filings
Spis treści
Two systems sit at the heart of this shift. The first is CESOP, which collects payment data from banks and payment service providers. The second is DAC7, which makes digital marketplaces like Amazon, eBay, Airbnb or Etsy send detailed seller reports every year. On top of that, if a marketplace is treated as a “deemed seller”, it has to charge, collect and report VAT itself for certain types of transactions, such as low-value imports or sales by non-EU sellers.
For business owners, this creates a simple reality: your sales numbers, payment flows, and VAT declarations are all being tracked in parallel. Tax authorities can cross-check the data from multiple sources to see if your VAT filings match what marketplaces and banks are reporting about you. Any mismatch — whether from missing invoices, incorrect VAT rates, or misreported countries of sale — raises a red flag and could trigger questions, audits, or even penalties.
The good news is that this is not something to fear if you understand how the systems work and set up a process for reconciliation. By taking the reports that marketplaces and payment providers already generate for you, and comparing them to the figures you submit in your VAT returns, you can spot issues early and fix them before the tax office does.
In short: EU authorities now have a much clearer picture of your e-commerce activity. The safest move for you as a seller is to make sure your own VAT returns tell the same story as the reports marketplaces and payment providers are filing on your behalf. Done right, reconciliation becomes a powerful tool to stay compliant, build trust, and keep your business focused on growth rather than on unexpected letters from the tax office.
Marketplace reporting obligations in the EU
For years, selling online through marketplaces felt relatively straightforward. You listed your products, received payments, and filed your VAT returns based on the numbers in your sales reports. But the EU has been steadily changing the game. New reporting regimes have been introduced with the aim of tightening tax compliance across borders, making sure that online sales generate the VAT revenues governments expect. As a result, marketplaces and payment providers now act as the eyes and ears of the tax authorities. They gather detailed data about transactions, sellers, and payments, and submit this information automatically. For small e-commerce businesses, this means there is far less room for inconsistencies, whether intentional or accidental, in the way VAT is declared.
There are three main elements to this framework. The first, known as CESOP, focuses on payment flows. The second, DAC7, looks at sellers and their activity on platforms. The third is a set of deemed supplier rules, which in certain cases treat marketplaces as if they were the sellers themselves, obliging them to collect and remit VAT directly. Understanding how these obligations work is crucial because the data being collected will inevitably be compared against your own VAT filings. If something doesn’t line up, it is no longer hidden — tax authorities will see it.
CESOP reporting: following the money
When someone buys from your online store and pays through a card processor, a payment app, or even a traditional bank transfer, the money doesn’t just move from your customer to you. It also leaves behind a digital footprint. From January 2024, payment service providers in the EU are legally required to send these payment records to a new database called the Central Electronic System of Payment information (CESOP).
The idea is simple: payments reveal a lot about where sales are really taking place. For every cross-border transaction within the EU, CESOP captures who received the payment, how much was paid, the currency, the payment method, the date, and the Member State where the payer is based. The authorities don’t see the personal identity of your customers, but even knowing the country is enough to build a picture of whether VAT is being declared in the right jurisdiction.
For sellers, the effect is that every euro you collect from abroad is logged and can later be cross-checked against your VAT returns. If you are reporting lower sales in a particular country than the payment data suggests, it is immediately visible. CESOP essentially allows tax authorities to follow the money trail of e-commerce across Europe in a way that was not possible before.
DAC7 reporting: spotlight on the seller
While CESOP focuses on payments, DAC7 turns the spotlight on the seller. Since January 2023, all digital marketplaces operating in the EU have been required to provide yearly reports to tax authorities about the individuals and businesses using their platforms. For a small e-commerce seller, this means that Amazon, Etsy, eBay, Airbnb, or any other platform you use is sending a detailed snapshot of your activity at the end of each year.
This snapshot contains not only your identity details — such as your name, address, date of birth if you are an individual, or registration and tax numbers if you are a business — but also the totals of your sales. The marketplaces must report how many transactions you completed, their combined value, and in which Member States they took place. They are also required to classify your activity, distinguishing whether you sold goods, provided services, rented property, or leased transport.
All of this is submitted by 31 January for the previous calendar year. That means, by early spring, tax offices across the EU already have a clear view of your sales volumes and where they occurred. If your VAT return for the same period does not reflect this information, the inconsistency stands out immediately. DAC7 is, in other words, a parallel ledger of your e-commerce business — one you don’t control but that authorities will treat as an authoritative record.
Deemed supplier rules: when the marketplace acts in your place
On top of payment and seller reporting, there is another rule that affects many online businesses, especially those importing goods into the EU or selling through platforms from outside the Union. In certain circumstances, the marketplace itself is treated as the supplier for VAT purposes. These deemed supplier rules apply most notably to imports of goods into the EU in consignments valued at up to 150 euros, and to supplies of goods by a non-EU seller to EU consumers where the sale is facilitated by a marketplace.
In these situations, the platform doesn’t just report your sales data; it actively steps into your shoes for VAT purposes. It calculates the VAT due, collects it from the customer, and remits it directly to the tax authority. To do this properly, the marketplace must keep transaction-level data, including the customer’s location, the VAT rate used, the VAT amount, and the full invoice value.
For sellers, this creates a mixed picture. On the one hand, there is less administrative burden because the VAT is handled by the platform. On the other, it means you need to be careful not to double-count these transactions in your own VAT return. If Amazon has already declared and paid VAT on certain low-value goods, you cannot include those amounts again. Reconciling these marketplace-collected VAT figures with your own accounts becomes an essential part of staying compliant.
The bigger picture
Together, CESOP, DAC7, and the deemed supplier rules create a system of overlapping reports. Payments, seller identities, and VAT amounts are all being logged and shared with authorities. For small business owners, the message is clear: the tax office no longer depends solely on what you declare. Instead, it has multiple sources of independent information to confirm or challenge your VAT returns. Success in this environment is not about hiding or minimising but about keeping your records straight, reconciling regularly, and ensuring that your own filings match the picture being painted by the marketplaces and payment providers you rely on.
What data authorities receive: side-by-side comparison
With CESOP, DAC7, and the deemed supplier rules all operating together, tax authorities across the EU now have a remarkably detailed picture of what is happening in online trade. Each regime captures a different layer of information, and when combined they create a near-complete story about your business. Understanding the kind of data that is being reported is essential, because it helps you see exactly what the tax office will be comparing your VAT return against.
CESOP: payment-level data
At the foundation of this reporting system sits CESOP, which collects information at the payment level. From 1 January 2024, payment service providers established in the EU must transmit records of cross-border payments when the payer is in one Member State and the payee is located in a different Member State or outside the EU. The obligation applies once a payee receives more than twenty-five such payments in a single quarter.
The data sent to CESOP includes the key identifiers of the payee, such as name, address, account number or IBAN, and the BIC of the payment service provider. It also captures the amount, the currency, the date and time of the transaction, the reference or transaction ID, and whether a refund has taken place. Perhaps most importantly, it records the Member State of origin of the payment, which is determined through IBAN or BIC rules. Individual payer identities are not reported, but even this country-level data is enough for tax authorities to draw conclusions about where consumption is taking place.
For sellers, this system is significant because it follows the flow of money directly. Regardless of how sales might be reported on platforms or in your own accounting software, the payment trail cannot be ignored. If cash has moved across borders, tax authorities will expect the corresponding VAT to be declared in your filings.
DAC7: seller-level data
Where CESOP follows the money, DAC7 shines a light on the seller. Since 1 January 2023, all operators of digital marketplaces in the EU have been obliged to submit an annual report to their tax authority, covering every seller active on their platforms during the calendar year. This report is due by 31 January, and shortly afterwards the information is automatically exchanged between Member States, meaning tax authorities across the Union have access to the same picture of your activities.
The report includes seller identification details, such as name and address, tax and VAT numbers, and date of birth in the case of individuals. It also provides a breakdown of activity for each Member State where sales occurred, showing the number of transactions, the total consideration received, and any fees, commissions or taxes withheld by the platform.
For authorities, DAC7 functions as a parallel ledger of your business. It spells out who you are, how active you have been, and where your sales took place. When this is compared with CESOP data, it connects the flow of payments to the sellers behind them. For you as a business owner, it means that your VAT return will be checked against figures that the marketplace itself has already provided to the tax office.
Deemed supplier rules: records versus reporting
The third layer of oversight comes from the deemed supplier rules introduced under the EU e-commerce package. In two key situations, a marketplace is treated as if it were the supplier of goods for VAT purposes. The first is where goods are imported into the EU in consignments with an intrinsic value not exceeding one hundred and fifty euros. The second is where non-EU sellers use a platform to make supplies of goods to EU consumers, including domestic sales within a single Member State.
In these cases, the platform is responsible for charging, collecting, and remitting VAT. It usually does this through the OSS or IOSS systems, which require aggregated VAT returns showing totals per Member State and per VAT rate, rather than line-by-line transaction reports. However, platforms must maintain detailed transaction-level records for ten years, including the Member State of consumption, the VAT rate and amount, dispatch and arrival details, and order or consignment numbers. These records must be made available electronically to tax authorities on request.
For sellers, the practical effect is that some sales are already accounted for through the platform’s VAT filings. Your own VAT returns must exclude those amounts to avoid double reporting. While the administrative burden is reduced because the platform handles the VAT, the need to reconcile your figures with the platform’s records remains critical.
A triangulated picture
Each regime has its own distinct focus. CESOP follows the money through payment flows, DAC7 identifies the seller and maps their activities, and the deemed supplier rules ensure that VAT is collected and remitted in cases where platforms step into the role of supplier. When viewed together, these regimes form a triangulated system that leaves little room for discrepancies.
Authorities can now see whether the cross-border payments flowing into your accounts align with the sales volumes reported by marketplaces, and whether the VAT collected and declared — either by you or by the platform — matches what should be due in each Member State. If your declared numbers are consistent with these independent datasets, your filings should pass smoothly. If they are not, questions are almost certain to follow.
Reconciling marketplace reports with VAT filings
Once you understand what data authorities receive through CESOP, DAC7, and the deemed supplier rules, the next challenge is making sure your own VAT returns tell the same story. Reconciliation is the process of comparing what marketplaces and payment providers have already reported about your sales with what you declare in your VAT filings. When it is done correctly, it prevents mismatches, reduces the risk of audits, and gives you confidence that your compliance is watertight.
Obtaining the right reports
The process starts with making sure you can access the same information that is already flowing to the authorities. Under DAC7, marketplaces such as Amazon, eBay, or Etsy must submit annual reports about sellers to their tax authority, and most provide equivalent reports to you as a seller. These reports summarise your activity, broken down by country and type of income, so that you can see the exact figures that will soon be circulating between Member States.
From January 2024, CESOP has added another layer. Banks, card acquirers, and payment service providers are now legally required to report cross-border payments within the EU. Although you cannot access CESOP itself, many providers are beginning to make CESOP-style exports available, giving merchants a way to view the same data that regulators are monitoring.
Finally, if a marketplace has acted as the VAT collector under the deemed supplier rules — for example, on low-value imports or sales made by non-EU sellers into the EU — it will typically generate VAT reports specific to those transactions. Collecting these reports regularly, and not just at the end of the year, provides the raw material for proper reconciliation.
Aggregating sales by country and VAT rate
Once you have these datasets, the next task is to bring some order to them. VAT in the EU is not reported in one global figure; it is reported according to the customer’s location and the rate of VAT applied. This means that the raw transaction data must be grouped accordingly.
Consider a seller making sales into Germany. Standard-rated sales in Germany must be calculated separately from sales at a reduced rate. Both of these German totals then need to be kept apart from sales made to France, Italy, or any other Member State. By structuring the figures this way, you begin to create a clear bridge between the numbers reported by marketplaces and the boxes you will eventually complete in your VAT return.
Matching data with VAT return boxes
With sales aggregated by jurisdiction and rate, the next step is to map them against the actual VAT return. The exact layout of returns differs from one country to another, but the principle remains constant. Domestic sales are reported in one section, cross-border supplies in another, and totals must reconcile across the form.
If the aggregated figures from your reports do not align with what you have submitted, you will need to understand and explain the difference. Sometimes the explanation is straightforward, such as a timing difference between when a payment was processed and when an invoice was issued. At other times, it may reveal an error that must be corrected. Either way, this comparison is essential because what looks like a small discrepancy on paper may be seen by the tax office as underreporting or overreporting.
Adjusting for input VAT
Reconciling sales is only one side of the equation. Marketplaces also charge fees and commissions, and in many cases these come with VAT attached, depending on the place of supply. To reclaim this input VAT, you need to check that the amounts in your purchase ledger match the invoices or monthly statements issued by the marketplace.
If you skip this step, you risk losing legitimate deductions that you are entitled to. On the other hand, failing to reconcile properly may result in claiming input VAT twice, creating errors that tax authorities are likely to notice. Marketplace fees should therefore be treated with the same care as any supplier invoice: checked, matched, and recorded correctly in your accounts.
Using reconciliation tools
Although reconciliation can be done manually with spreadsheets, the process is significantly easier with specialised software. Solutions such as A2X and other marketplace-to-accounting integrations are designed to import sales and fee data automatically, map it into your chart of accounts, and align it with VAT return requirements. By automating much of the grouping, matching, and error detection, these tools flag discrepancies before they turn into compliance issues.
For small businesses trading across multiple marketplaces or handling high transaction volumes, these systems transform what could be a daunting quarterly task into a manageable routine. Instead of spending days compiling and checking spreadsheets, you can review a clean, reconciled dataset that already mirrors the way your VAT return is structured.
Turning reconciliation into routine
Reconciliation may sound like an additional burden, but in practice it is best understood as a habit that protects your business. By checking marketplace reports against your VAT filings regularly, you build a safety net that catches errors before the tax office does. Over time, this habit not only reduces the risk of audits but also improves the accuracy of your internal records, giving you a more reliable picture of performance across different countries.
In the new compliance environment shaped by CESOP, DAC7, and the deemed supplier rules, reconciliation is no longer an optional best practice. It is the foundation of compliance itself. Sellers who build this process into their regular accounting cycles will find themselves less exposed to risk and better prepared for growth in the European market.
Practical challenges and common pitfalls
Reconciling VAT data in the new EU reporting environment is not just about gathering reports and matching them against your filings. In practice, there are several challenges that can complicate the process. Even businesses that keep careful accounts often encounter small discrepancies, and if these are not addressed early, they can create problems down the line. Understanding the most common pitfalls makes it easier to avoid them and to keep your VAT compliance running smoothly.
Timing differences between CESOP and DAC7
One of the most common sources of confusion is timing. CESOP reports are submitted quarterly by payment service providers, while DAC7 reports are annual, with marketplaces required to submit them by the end of January for the previous calendar year.
This creates a situation where payment data is flowing to tax authorities throughout the year, but the corresponding seller activity is only shared once annually. If you try to compare the two datasets too literally, mismatches appear. For example, a payment received in December will show up immediately in CESOP for the fourth quarter, but the DAC7 report that confirms the seller’s activity will not be submitted until the following January.
The important point to understand is that these systems are designed to complement one another, not to match perfectly on a month-to-month basis. Your VAT return is what ties them together. As long as the totals you declare are accurate and consistent, small timing differences are explainable and do not pose a problem.
Currency conversion issues
Another practical challenge is currency conversion. Marketplaces often allow you to sell in multiple currencies, and payment providers will record each transaction in the currency of processing. VAT returns, however, must be filed in the currency of the Member State where you are identified or registered — for example, in euros under the One Stop Shop, or in the local national currency for domestic filings.
If you sell in pounds, zloty, or dollars, the figures reported by marketplaces or payment providers must be converted before they are entered into your VAT return. Even small variations in exchange rates can cause differences between CESOP records, DAC7 data, and your own accounts. The best way to avoid confusion is to adopt a consistent rule, such as always using the European Central Bank daily or monthly rate applicable in the reporting period. This ensures that your conversions are defensible and transparent if ever questioned.
Handling refunds and returns
Refunds and returns are another common source of mismatches. Payment service providers will usually record the original sale and the refund as separate entries, while marketplaces often present only net figures for the period.
If you do not account for these correctly, you may end up overstating your taxable turnover. On the other hand, misreporting them could make it look like you are underreporting. VAT law is clear that refunds reduce the taxable base, so building a system to track them alongside your sales is essential. This ensures your reported numbers reflect the true position of your business, rather than an inflated or distorted picture.
Risks of double reporting and jurisdiction mismatches
Double reporting is a pitfall that frequently catches out sellers. This usually arises when a marketplace acts as a deemed supplier under the EU e-commerce package. For consignments up to €150 reported through IOSS, or for sales by non-EU sellers to EU consumers facilitated by a platform, the marketplace is responsible for collecting and remitting VAT. In these cases, you must not include the same transactions again in your own VAT return. If you do, your turnover and VAT will appear artificially inflated compared with the data the tax authorities already hold.
Jurisdiction mismatches are another frequent error. VAT must always be reported in the country of consumption, but sellers sometimes mistakenly allocate sales to the country of dispatch. A sale shipped from Spain to a customer in Germany, for instance, is a German B2C sale, not a Spanish one. CESOP data makes these errors highly visible, because payment records always identify the Member State of the payer.
Staying ahead of the pitfalls
None of these issues are insurmountable, but they show why reconciliation cannot be left to chance. Timing differences, currency conversion rules, refunds, and double reporting all require a structured, repeatable process. By anticipating these pitfalls and building checks into your reconciliation routine, you reduce the risk of discrepancies and gain confidence that your VAT filings align with the picture tax authorities are forming from CESOP, DAC7, and deemed supplier data.
Summary
The new EU reporting environment has transformed how online trade is monitored. Marketplaces and payment providers are no longer just intermediaries — they now act as direct channels of information for tax authorities. CESOP follows the flow of cross-border payments, DAC7 provides detailed annual snapshots of seller activity, and the deemed supplier rules ensure that VAT is collected and remitted by platforms in specific cases. Together, these three systems create a triangulated view of your business, one that tax authorities can use to cross-check your filings against independent data sources.
For sellers, this means compliance is no longer only about filling in a VAT return once a quarter. It is about making sure that your declared numbers match the story already being told by marketplaces and payment providers. Reconciling your data — obtaining reports, grouping sales by country and VAT rate, checking them against VAT return boxes, adjusting for fees and refunds, and using software where helpful — has become a crucial routine.
Alongside the opportunities, there are practical challenges to overcome. Timing differences between CESOP and DAC7, currency conversions, treatment of refunds and returns, and the risk of double reporting all complicate the process. But with a structured approach, these issues can be managed effectively.
The bigger picture is one of transparency. Tax authorities now have the tools to track payments, seller activity, and VAT liabilities across borders with unprecedented precision. The best response for e-commerce businesses is to embrace reconciliation as part of their regular workflow. By doing so, you not only protect yourself from audits and penalties but also gain clearer insight into your own performance across markets. In today’s environment, reconciliation is no longer an optional best practice — it is the foundation of trustworthy, future-proof VAT compliance.
