The results of the consultation on the fair taxation of the digital economy, in which ETAF participated in January, have been published by DG TAXUD. The consultation was launched in October 2017 to define an approach to the taxation of the digital economy. The consultation listed the main problems of the international tax system in relation to the digital economy and proposed both temporary and long-term solutions to tackle these issues.
The results show that Germany (16,8% of the total answers), Italy (10,1%), Belgium (8,5%) and France (6,7%) were among the main contributors of this consultation. Furthermore, almost half of the contributors were individuals, while 24% were business organisations or advisory bodies, like ETAF.
The majority of the answers, in line with the ones of ETAF, highlighted that the current international tax rules do not completely match with the digital economy and do not allow for fair competition between traditional and digital companies, allowing the latter to benefit from certain tax regimes that push down their tax contributions. Furthermore, the majority of the responders believe that Member States are not able to collect taxes on the value that some digital companies creates on their territories and this could lead to the adoption of uncoordinated measures by Member States with subsequent fragmentation of the Single Market.
Based on the answers to the consultation, an action regarding the current international tax rules in this field is needed and a slight majority of the responders believe that the problem should be addressed at international level, as was mentioned in the position paper of ETAF.
It is worth noting that, as opposite to what was stated by ETAF, the majority of the contributors agrees with the possible adoption of a temporary solution until a more comprehensive solution is reached and in particular with the introduction of a tax on revenues from certain digital services (e.g. online advertising).
Finally, among long term solutions, the “Digital presence in EU” proposal (consisting in implementing new rules for PE and profit attribution to capture digital activities) was the most supported by the contributors.
