VAT compliance for digital services and marketplaces

Digital platforms and marketplaces are no longer just reshaping commerce, they’re redefining how VAT is enforced. 

At ELEVATE 2026, tax leaders from Cloudflare and Trendyol shared what compliance looks like when transaction volumes scale globally, reporting becomes real-time and platform liability rules continue to expand. 

The message was clear: compliance at scale is no longer reactive, and it must be built into the fabric of the business.

Real-time reporting is redefining “audit-ready” 

The shift from periodic reporting to continuous transaction controls (CTCs) has fundamentally changed what it means to be compliant. For Mariana Cardoso at Cloudflare, the concept of a “month-end close” is becoming obsolete: 

“We are live. We need to reconcile everything in real-time. We can’t wait for month-end to ensure accuracy and compliance.” 

This shift introduces a new reality: 

• Compliance must happen at the point of transaction, not after 

• Data must be accurate, complete and audit-ready at all times 

• Tax teams must move from validation to continuous monitoring 

But the biggest impact isn’t just technical, it’s organisational. Real-time compliance forces closer collaboration across Tax, IT, Finance and Operations. Because when compliance is continuous, everyone becomes part of the compliance process. This doesn’t just impact in-house teams, but also relationships with customers and suppliers.

The real challenge: Translating tax into systems 

While regulation is complex, the bigger challenge lies in execution. As Davide Passannanti, Trendyol, put it: 

“The real challenge is tax people talking with IT.” 

And that challenge is only intensifying. Tax teams must now: 

• Translate legislation into system requirements 

• Align with IT teams working in data structures and formats  

• Coordinate across legal, treasury and product teams 

For marketplaces, the complexity goes even further. They must also educate external stakeholders like sellers who often have little or no understanding of VAT obligations. 

“Our sellers are not tax experts. They sell clothes, they drive taxis – VAT is not their world.” 

This creates a dual challenge: 

• Internal alignment across functions 

• External enablement across ecosystem participants 

Platform liability is shifting the compliance burden 

As platform liability rules expand, marketplaces are increasingly becoming the tax collector. Under regimes like ViDA, platforms may be required to: 

• Determine the correct VAT treatment at checkout 

• Assess seller status (VAT registered or not) 

• Apply the correct scheme (e.g. SME thresholds, deemed supplier rules) 

• Collect and remit VAT directly 

This transforms marketplaces into real-time tax engines, but this comes with significant complexity. 

“This is a massive IT project….At checkout, you need to determine VAT rates, seller status and multiple scheme conditions in real time.” 

Davide Passannanti, Trendyol

The impact doesn’t stop at the platform level, there are knock-on effects across the ecosystem: 

• More sellers may voluntarily register for VAT to recover input costs 

• Tax authorities gain greater visibility into transaction-level data 

• Compliance becomes more enforceable and less avoidable 

Global complexity is accelerating 

For digital service providers, the challenge is not just scale, it’s fragmentation. 

VAT treatment varies significantly by jurisdiction: 

• What qualifies as a digital service differs country to country 

• Reporting obligations vary (real-time vs periodic) 

• eInvoicing models are inconsistent 

• Some regimes operate on cash accounting, others on accrual 

In countries like Mexico and South Korea, for example: 

• Businesses must reconcile tax authority data with internal AP systems 

• Transactions may need to be reported even before internal recognition 

The result? Continuous reconciliation is operationally critical.

Zero thresholds and new markets: Opportunity or risk? 

Expansion into emerging markets, particularly those with zero VAT thresholds, introduces both opportunity and risk for digital sellers. 

Companies must: 

• Assess whether they fall within scope of local rules 

• Distinguish between VAT and Digital Services Taxes (DST) 

• Interpret legislation that may not clearly reflect modern digital business models 

As Mariana highlights, success often comes down to interpretation: 

“Read between the lines. Understand what the law is really saying and how it applies to your business model.” 

This requires: 

• Strong internal understanding of products and services 

• Close collaboration with engineering teams 

• Trusted external advisors and peer networks 

DAC7 + ViDA: From visibility to enforcement 

DAC7 is a European Union tax directive that entered into force on 1 January 2023 and requires digital platforms to report the income earned by sellers on their platforms to national tax authorities. The combination of DAC7 reporting and ViDA reforms marks a significant shift in how tax authorities operate. 

With DAC7, authorities already have: 

• Seller-level revenue data 

• Platform-reported activity 

With ViDA, they gain: 

• Transaction-level visibility 

• Real-time reporting capabilities 

Together, these frameworks create a near-complete picture of marketplace activity. 

As Davide notes: 

“With DAC7, authorities know how much sellers earn. With ViDA, they’ll know how many transactions they perform. The dots are connected.” 

This reduces the gap between: 

• Reported activity 

• Taxable activity 

And ultimately makes non-compliance far more difficult to sustain. 

From compliance burden to strategic opportunity 

Despite the complexity, there is a clear shift in mindset among leading organisations. Rather than viewing these regulations as a burden, they are treating it as a transformation opportunity. 

For growing digital businesses, initiatives like ViDA can enable: 

• Process standardisation across regions 

• System modernisation 

• Operational efficiencies at scale 

As Mariana puts it: 

“It’s not just about being compliant. It’s about creating efficiencies through compliance.” 

Key takeaway: Compliance must scale with the business 

Digital platforms and services operate in real time, across borders and at scale. 

VAT compliance must now do the same. 

That means: 

• Embedding compliance into systems, not spreadsheets 

• Enabling collaboration across tax, IT and business teams 

• Preparing for a future of continuous, data-driven enforcement 

Because in a real-time world, compliance isn’t a checkpoint. It’s a capability. 

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