We study the class of linear differential-algebraic m-input m-output systems which have a transfer function with proper inverse. A sufficient condition for the transfer function to have proper inverse is that the system has ‘strict and non-positive relative degree’. We present two main results: first, a so-called ‘zero dynamics form’ is derived; this form is—within the class of system equivalence—a simple form of the DAE; it is a counterpart to the well-known Byrnes–Isidori form for ODE systems with strictly proper transfer function. The ‘zero dynamics form’ is exploited to characterize structural properties such as asymptotically stable zero dynamics, minimum phase, and high-gain stabilizability. The zero dynamics are characterized by (A, E, B)-invariant subspaces. Secondly, it is shown that the ‘funnel controller’ (that is a static non-linear output error feedback) achieves, for all DAE systems with asymptotically stable zero dynamics and transfer function with proper inverse, tracking of a reference signal by the output signal within a pre-specified funnel. This funnel determines the transient behaviour.