Today, the European Commission officially approved a new Digital Transaction Reporting Directive (DTRD), aimed at increasing transparency and combating VAT fraud in online commerce. While the directive is primarily targeted at large e-commerce platforms, small businesses across Europe are sounding the alarm over the potential administrative burden and compliance costs.
The directive, which will go into effect in January 2026, requires all digital platforms — including marketplaces, payment providers, and online service portals — to report detailed transaction data for every seller using their services, including location, revenue, and frequency of sales.
While the EU says this will «level the playing field and reduce unfair competition from non-compliant operators,» small retailers warn that the increased bureaucracy could disproportionately affect independent sellers and microbusinesses, many of whom rely on a mix of digital tools and cross-border platforms to survive.
“We understand the need for tax fairness,” said Marie Jensen, owner of a small artisan shop in Denmark that sells handmade goods online. “But we don’t have legal or tax teams — we have one person doing everything. This could break us.”
Industry associations such as SME Europe and the European Digital SME Alliance have called for a grace period, simplified reporting tools, and financial support for small traders adapting to the new requirements.
The European Commission has acknowledged the concerns and stated that it is “working on guidelines and support packages” for smaller operators, but critics argue that rollout timelines are too tight and communication with small merchants has been lacking.
As the debate intensifies, many small businesses are left wondering: Will this move toward digital tax transparency help them compete — or push them out of the market altogether?
