EACA, the European association of communications agencies, has submitted its comments on the European Commission’s plans to introduce a Europe-wide digital levy.
Agencies, like many other European businesses that pay taxes at Member State-level, have been hit hard by the Covid-19 crisis. We do not think that this is the time to put further strain on them with an additional tax.
We also urge the Commission not to diverge from international discussions by redirecting efforts into developing an EU-level digital levy. This signals a lack of confidence and commitment of the Commission to the OECD process, which we fear is highly disruptive. It could also lead to more Member States looking into national digital services taxes (DSTs) for the same reasons.
At the same time, agencies struggle with the impact of national DSTs, which consistently lack a clear definition of who is targeted by the tax. This has led to such taxes being passed on along the supply chain, thereby increasing prices for everyone, while allowing those who were supposed to shoulder the tax to avoid their fair burden of it.
We, therefore, urge the Commission:
- To show clear and unambiguous support to the global solution.
- To conduct a new impact assessment of a digital levy before pressing ahead, which considers the risk of taxes being passed on and assesses which types of media are likely to benefit from a potential advertising spending shift.
- To engage directly with companies that are part of the digital advertising industry to fully understand the ecosystems and supply chains and the role of the different parties.
Our full position paper can be found here.