The regulatory landscape for tax compliance is shifting across every major market. Governments are moving from annual paper-based filing to real-time digital reporting. They are mandating electronic invoicing, digital record-keeping, and in some cases, quarterly digital submissions. For the hundreds of millions of freelancers and sole traders worldwide, these changes mean that tax compliance is becoming more frequent, more technical, and more burdensome.
For fintechs and neobanks, this regulatory shift creates a commercial opportunity. The platforms that help their users comply with these new requirements will deepen engagement, reduce churn, and capture revenue that currently flows to accountants and tax software providers. The platforms that ignore it will watch their users struggle and eventually switch to competitors that offer more comprehensive financial services.
Making Tax Digital (UK)
The UK's Making Tax Digital programme is the most advanced and well-documented example of government-mandated tax digitisation.
MTD for VAT has been live since April 2019 for VAT-registered businesses with taxable turnover above the VAT threshold. Digital record-keeping and digital submission through compatible software are mandatory. Paper returns and manual submissions through the HMRC portal are no longer accepted.
MTD for Income Tax Self-Assessment is the next phase. Starting in April 2026, self-employed individuals and landlords with qualifying income over 50,000 GBP will be required to maintain digital records and submit quarterly updates to HMRC through compatible software. The threshold drops to 30,000 GBP from April 2027.
This is a fundamental change in how 4.3 million self-employed people in the UK interact with the tax system. Instead of filing one self-assessment return per year, they will need to submit five digital updates per year: four quarterly updates plus a final declaration. Each update must be submitted through MTD-compatible software. Manual record-keeping in spreadsheets will no longer satisfy the digital requirements unless the spreadsheet is bridged to HMRC's API.
For neobanks serving UK freelancers, MTD for Income Tax is a forcing function. Their users will need compatible software. If the neobank does not offer it, the user will go elsewhere to find it, and that elsewhere might be a competing platform that offers both banking and MTD compliance in a single product.
DAC7 (European Union)
The EU's Directive on Administrative Cooperation, specifically DAC7, imposes reporting obligations on digital platforms. Since January 2023, platforms that facilitate the sale of goods, provision of services, rental of immovable property, or rental of transport must report seller data to tax authorities.
DAC7 is often misunderstood by fintech companies. It does not require platforms to file tax returns on behalf of their sellers. It requires platforms to report seller identity and income data to the tax authority in the seller's country of residence. The tax authority then uses this data to verify that the seller has correctly reported their income on their own tax return.
The practical effect for platform users is increased scrutiny. A freelancer selling services through a gig platform knows that the platform is reporting their income to the tax authority. If they fail to file or underreport, the discrepancy will be flagged. This creates a strong incentive for the freelancer to file correctly and on time.
For platforms, DAC7 creates an indirect but powerful commercial incentive to help their sellers file. If a platform's sellers are consistently non-compliant, the platform's relationship with tax authorities becomes strained. If the platform helps its sellers comply, perhaps by offering embedded tax filing, it reduces regulatory friction for itself while delivering genuine value to its users.
Fatturazione Elettronica (Italy)
Italy has been a global leader in electronic invoicing mandates. Since 2019, all B2B and B2C invoices in Italy must be transmitted through the Sistema di Interscambio (SdI), a government-operated electronic invoicing system. Paper invoices are not valid for tax purposes.
In 2024, the mandate was extended to cover flat-rate taxpayers (regime forfettario), bringing an additional 1.8 million sole traders and micro-businesses into the electronic invoicing system.
For neobanks serving Italian partita IVA holders, electronic invoicing is no longer optional. If the banking app does not integrate with SdI, the user needs a separate tool for invoicing. This fragments the user experience and creates an opening for competitors that offer integrated invoicing and e-invoicing compliance.
The logical extension of e-invoicing integration is tax filing integration. If the neobank already handles the user's invoices electronically, it has the data needed to compute the user's quarterly IVA return (Liquidazione IVA Periodica) and annual income tax return. Adding filing as a feature is a natural product evolution, and the regulatory environment is pushing in exactly that direction.
DATEV and Digitisation in Germany
Germany's tax system is deeply integrated with the DATEV ecosystem. DATEV eG is a cooperative that provides IT solutions for German tax advisors, and its data formats and interfaces are the de facto standard for tax data exchange in Germany.
Several neobanks serving the German market, including Kontist, Holvi, and FYRST, offer DATEV export functionality. This allows the user's bank data to be imported into their Steuerberater's DATEV system for processing.
While this solves the data transfer problem, it does not solve the last mile problem. The data still leaves the banking app, enters the accountant's system, and the return is filed separately. The user must still engage an external Steuerberater and manage that relationship independently.
Germany's upcoming E-Rechnung mandate for electronic invoicing, effective January 2025 for B2B, adds another layer of digital compliance requirements that neobanks will need to address.
OECD Pillars and Global Minimum Tax
At the international level, the OECD's Base Erosion and Profit Shifting framework and the Global Minimum Tax (Pillar Two) are primarily relevant to large multinational corporations. However, the broader OECD initiative to increase tax transparency and reduce avoidance is driving digitisation of tax systems globally.
The OECD's Common Reporting Standard already requires financial institutions to report account holder information to tax authorities. The extension of similar reporting to gig economy platforms through DAC7 and its equivalents in other jurisdictions is part of this trend.
For fintechs, the direction of travel is clear. Tax authorities worldwide are moving toward real-time, digital, automated reporting and filing. The friction of annual paper-based compliance is being replaced by ongoing digital compliance obligations. Platforms that facilitate this transition for their users will be rewarded with stronger engagement and revenue. Platforms that do not will lose users to those that do.
The Compliance Burden on Freelancers
The people most affected by these regulatory changes are not large corporations with dedicated tax departments. They are freelancers, sole traders, and micro-business owners who manage their own compliance.
Consider a freelance graphic designer in Italy who uses a neobank for their business account. They must issue electronic invoices through SdI for every client. They must file quarterly IVA returns. They must file an annual income tax return. They must pay quarterly advance tax instalments. They must maintain digital records that are compatible with the Agenzia delle Entrate's requirements.
Each of these obligations requires either specialised software, a professional advisor, or both. The total compliance cost for a small freelancer can easily reach 1,000 to 2,000 euros per year, which represents a significant portion of their income if they are in the early stages of their freelance career.
If the neobank that holds their business account could handle some or all of these obligations through embedded services, the value proposition would be compelling. Not just convenience, but real cost savings on compliance that is mandatory and unavoidable.
The Opportunity for Fintechs
The regulatory trends described above point in one direction. Tax compliance is becoming more digital, more frequent, and more burdensome for small businesses. Governments want digital data, digital submission, and digital records. Freelancers and sole traders need tools to meet these requirements.
Neobanks and fintech platforms are the natural home for these tools. They already hold the financial data. They already have the user relationship. They already offer adjacent services like invoicing and expense management. Adding tax filing to this stack is the logical completion of the freelancer financial experience.
The platforms that move first will establish themselves as the default financial operating system for freelancers in their markets. The platforms that wait will find that their competitors have already locked up the user relationship by offering a more complete service.
The regulatory environment is not waiting. MTD for Income Tax launches in April 2026. DAC7 reporting is already live. Italy's e-invoicing mandate covers nearly all businesses. Germany's E-Rechnung mandate is in effect.
The question for neobank product teams is not whether these compliance requirements will affect their users. They already are. The question is whether the neobank will help users meet those requirements inside the app, or watch them leave to deal with compliance elsewhere.
Michael Cutajar, CPA — Founder of Accora.