Digital taxation

Digital taxation

In response to discussions regarding big digital companies’ tax responsibilities, the European Commission proposed new legislation in March 2018. The package consists of two directives. One aims to reform corporate tax rules to capture businesses that are not registered in a country but have a “significant digital presence” (i.e. interaction with users). The other – intended as an interim solution – introduces a revenue tax on specific digital activities, including the placement of an ad, which allegedly escape current tax schemes. After the Commission’s proposal failed to get approved in the Council in December 2018 for “political reasons”, the Romanian Presidency is now working on a stripped down version of it, based on a proposal by Germany and France. The refined proposal is expected in spring 2019. Pending an EU-wide solution and given the need for unanimous support by all Member States of such a tax (which decreases the likelihood that it passes), several European countries have started to draft their own national digital tax laws (e.g. France, Spain, Italy, UK).

EACA understands that the original intention of the Commission is to fairly and efficiently tax “digital activities” of companies that do not have a physical presence in the EU or in a particular EU Member States but still have large audiences in those countries. We do not believe that the proposed measures aim to cover communications agencies.

Communications agencies play an important role in creating jobs and growth and fostering creativity in Europe. Their activities span over the offline and online world and can take place at local, national and European levels. EACA members are incorporated or have a physical presence in the EU. Their services are subject to national tax.

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