Communication on taxation standards for the digital economy

Summary:

Communication published by the European Commission in March 2018, which provides the framework and an update on the work carried out in relation to taxation of digital economy.

Further information:

Considering that the digital economy has transformed the way citizens and businesses interact, the European Commission made the Digital Single Market (DSM) one of its main priorities. In this context, its Communication on a 'Fair and Efficient Tax System in the European Union for the Digital Single Market' set out key issues and objectives with regard to taxation of the digital economy. Fair and effective taxation was seen as essential in supporting the DSM to deliver on its potential, as much as in keeping an updated tax environment. A fair and efficient tax system provides revenue for public services, while at the same time supporting economic growth and the competitiveness of businesses.

The Communication was published on 21 March 2018 alongside two legislative initiatives relating to corporate taxation and taxation of digital services:

• Directive laying down rules relating to the corporate taxation of a significant digital presence
• Directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services

These proposals were aimed at providing a comprehensive structural solution to the question of taxation of the digital economy within the European Union (EU), and supporting Member States in extending this to non-EU jurisdictions. They also provide an interim solution to address the risks of fragmentation of the Single Market and prevent further divergence, within a comprehensive solution is being discussed, agreed and implemented. The proposals respond to calls from the European Council and the Council of the European Union on the need to create an effective and fair taxation system fit for the digital era. These proposals should be the common basis that the EU and its Member States would use to feed the international work on taxing the digital economy and to contribute to a successful conclusion of such work.

Official

European Commission: Fair Taxation of the Digital Economy https://ec.europa.eu/taxation_customs/business/company-tax/fair-taxation-digital-economy_en

EP: Legislative Train: Taxation of the digital economy http://www.europarl.europa.eu/legislative-train/theme-deeper-and-fairer-internal-market-with-a-strengthened-industrial-base-taxation/package-taxation-of-the-digital-economy/06-2019

European Commission: Fact Sheet, 21/03/2018: Questions and Answers on a Fair and Efficient Tax System in the EU for the Digital Single Market http://europa.eu/rapid/press-release_MEMO-18-2141_en.htm

European Commission: Press Release, 21/03/2018: Commission proposes new measures to ensure that all companies pay fair tax in the EU http://europa.eu/rapid/press-release_IP-18-2041_en.htm

European Commission: Remarques introductives du Commissaire Moscovici à la conférence de presse sur les nouvelles propositions pour fiscalité juste et effective de l'économie du numérique http://europa.eu/rapid/press-release_SPEECH-18-2342_fr.htm

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Commentary and Analysis

EUObserver, 01/06/2018: Nordic states urge U-turn on EU digital tax plans https://euobserver.com/opinion/141966

EPRS: At a Glance, December 2018: Fair taxation of the digital economy http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_ATA(2018)630327

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