It’s been a while since the first time I saw this error when working with SSRS Fetch-based reports for Dynamics CRM Online. It costed me a few hours scratching my head. Then I remembered I updated the SQL Server Data Tool to the latest version to work with Dynamics 365. But I was creating new reports for an old CRM project since 2015.
Solution
The latest SSDT targets SQL Server 2016 by default for Reports Project in Visual Studio, so you need to select the correct Target SQL Server.
Right click the your report project > Properties:
I had to select SQL Server 2008 for it to work in my case. Then rebuild the reports, when uploading to CRM remember to select reports from the build folder bin/Debug or bin/Release.
Happy reporting!
Dynamics CRM Experience 