The Commission today announced new detailed measures that will pave the way for a smooth transition to new VAT (Value-Added Tax) rules for e-commerce that come into force in January 2021.
MEPs are set to vote on the introduction of a digital tax, the first of its kind, targeting major tech companies.
Taxation of enterprises that use digital technology is high on the political agenda. Goods are increasingly sold by including services provided over the internet. New business models are used and the need for a permanent establishment in a specific location is less pronounced than before. The European Economic and Social Committee (EESC) has been working on this thematic over the last years and is currently drawing up an own-initiative opinion entitled ‘Taxation in the digitalised economy’. In this context the EESC organises a public hearing during which high-level participants will look at the digitalisation of the economy with a view to identifying possible solutions to the resulting taxation challenges – amongst others, on how to reform international taxation rights. The findings of the hearing will feed into the EESC opinion that will be adopted later in 2019.
Today, EU Finance Ministers have failed to come to an agreement on a proposed digital tax. This is despite the backing of the proposals by the Economic Affairs committee of the European Parliament which voted last night by a large majority in favour of a digital tax. A digital tax based on “digital presence” and/or revenues would help end the profit shifting and tax evasion of tech giants.