Plans to introduce an EU digital services tax (DST) have been significantly reduced in scope by a Franco-German joint declaration presented at the meeting of the Economic and Financial Affairs Council (ECOFIN) on 4 December.
The joint declaration calls for the 3% tax to be limited to revenues from advertising sales, dropping elements of the original proposal which also included intermediary activities and selling user data. According to the Financial Times, the revised plan would halve the estimated €5bn a year that the DST was expected to raise.
France and Germany have re-focused their efforts on the OECD reaching an international agreement for taxing the digital economy by 2020. If no international agreement is reached by 2020, the revised EU DST would come into force in 2021, including a sunset clause requiring the tax to expire by 2025.
The Austrian Presidency had also presented a compromise text, although the Austrian finance minister, Hartwig Löger, said after the meeting that his government would support the Franco-German approach. European Commission vice-president, Valdis Dombrovskis, expressed the hope ‘that member states can forge a compromise as soon as possible in 2019 under the Romanian presidency’.
‘From the point of view of the Commission’, Dombrovskis said, ‘it continues to be unacceptable that digital companies continue to pay less than their brick and mortar equivalents’.
Sweden, Finland, Ireland, Denmark are still likely to oppose any interim EU tax before agreement at OECD level.
Plans to introduce an EU digital services tax (DST) have been significantly reduced in scope by a Franco-German joint declaration presented at the meeting of the Economic and Financial Affairs Council (ECOFIN) on 4 December.
The joint declaration calls for the 3% tax to be limited to revenues from advertising sales, dropping elements of the original proposal which also included intermediary activities and selling user data. According to the Financial Times, the revised plan would halve the estimated €5bn a year that the DST was expected to raise.
France and Germany have re-focused their efforts on the OECD reaching an international agreement for taxing the digital economy by 2020. If no international agreement is reached by 2020, the revised EU DST would come into force in 2021, including a sunset clause requiring the tax to expire by 2025.
The Austrian Presidency had also presented a compromise text, although the Austrian finance minister, Hartwig Löger, said after the meeting that his government would support the Franco-German approach. European Commission vice-president, Valdis Dombrovskis, expressed the hope ‘that member states can forge a compromise as soon as possible in 2019 under the Romanian presidency’.
‘From the point of view of the Commission’, Dombrovskis said, ‘it continues to be unacceptable that digital companies continue to pay less than their brick and mortar equivalents’.
Sweden, Finland, Ireland, Denmark are still likely to oppose any interim EU tax before agreement at OECD level.
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