EU Parliament to tax the digital economy

EU Commission and Parliament representatives

Rome [ENA] As international talks at OECD level on taxation systems for the digital economy entered a new phase in October, European Parliament interrogated the Commission on its strategy on Monday and adopted a resolution on 18th December with 479 votes in favour, 141 against and 69 abstentions. If international negotiations will be unsuccessful, the EU should go it alone. In the resolution, the European Parliament expressed

concern that there is no shared approach at EU level on the ongoing international negotiations and called on the Commission and member states to agree on a joint and strongminded EU position, while making their own positions publicly known. The Parliament supports Commission President Ursula von der Leyen’s commitment to propose an EU solution, should an international deal not be reached by the end of 2020. At international level, the EU’s position should aim to ensure that the Single Market functions smoothly, particularly by defending a level playing field for all types of firms. The Parliament demanded that digital economy firms pay a fair share of tax where the actual economic activity and value creation take place and

that the income from taxes is impartially distributed across all the member states. Following the financial crisis, the G20 tackled tax evasion, tax avoidance and money laundering through the Base Erosion and Profit Shifting (BEPS) project, leading to the BEPS action plan. This action plan, however, did not address the harmful practices existing in the digitalized economy and this led to further work being set up under BEPS in 2015 (BEPS Action 1 Report).

In October and November 2019, the OECD launched two separate public consultations on the matter, aiming to find consensus on a way forward.In 2018/2019, the EU got close to approving its own set of rules (legislation on a digital services tax, and legislation defining a significant digital presence), however, the need for unanimity within the Council meant that a few member states could impede a deal being reached.