Weekly Tax News – 26 November 2018

Lively discussion in the European Parliament on taxing digital giants

On 19 November, the ECON committee of the European Parliament discussed the two proposals of the European Commission to tax the digital economy. On the report of Dariusz Rosati (EPP, Poland) on the corporate taxation of a significant digital presence, 120 amendments have been tabled, mainly to link it with the CCCTB and the work of the OECD. The political negotiations between the groups have already brought 11 compromises on the scope and definition of “significant digital presence”, on the revision clause after three years of implementation and on the sunset clause.

On the interim solution (3% tax on turnover of certain digital activities), the proposals of Paul Tang (S&D, Netherlands) to raise the tax rate to 5% and to scope in the provision of video, audio or text content using digital interface and the sale of goods or services contracted via e-commerce platforms have been generally criticized by the EPP group. Among the 183 amendments tabled, Tang expressed his interest in the ones that propose to lower the threshold for taxable income to €25 million and to set the tax rate at 3% for taxable income between €25 million and €100 million and 5% for income above €100 million. According to the proposer of these amendments (Esther de Lange, EPP, Netherlands), this solution could be combined with an annual tax allowance of €750,000 euros to protect small businesses.

The ECON Committee MEPs will vote on 3 December on these reports, the day before the ECOFIN Council meeting. In a hearing before the French National Assembly, the European Commissioner for Taxation, Pierre Moscovici, admitted that an agreement in the ECOFIN is unlikely to be reached. However, according to the German Finance Minister Olaf Scholz, Germany and France shall present a “joint proposal” on this topic.

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TAX3 Committee hearing on Danske Bank scandal

On Wednesday 21 November, the TAX3 Committee of the European Parliament held a hearing on Money laundering in EU banks. The cases of the Danish Danske Bank and of the Dutch ING bank were discussed and the whistle-blower Howard Wilkinson went into detail on the case of Danske Bank. He explained that bank confidentiality agreements, as the one he was asked to sign after his resignation, prevent the reporting of illegal actions and should be banned by the EU to improve the protection of whistle-blowers. He also highlighted that an increasing whistle-blower protection in Europe is a powerful instrument to fight tax frauds and money laundering.

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Facebook settled with the Italian Tax Authority and appeals in the UK

On Thursday 22 November, Facebook Italia has signed an agreement closing its disputes with the tax-collection agency over the 2010-2016 period. “We are acting in compliance with the local laws in Italy and in all the countries in which we operate and we will continue to collaborate with all the Italian authorities”, a Facebook spokesman said. Facebook will pay over 100 million euros to Italy to settle the case. The news came on the same day that Facebook announced that it is appealing against the £500,000 (€565,000) fine levied at it from the UK’s Information Commissioner’s Office (ICO), for its part in the Cambridge Analytica scandal. The company claimed that there is “no evidence” to warrant the sanction.

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