Weekly Tax News – 29 March 2021

ECON Committee adopts report on digital taxation

On 23 March, the Committee on Economic and Monetary Affairs (ECON) of the European Parliament adopted by a large majority (48 votes in favour, 4 against and 6 abstentions) the draft own-initiative report on digital taxation prepared by Martin Hlaváček (Renew Europe, Czech Republic) and Andreas Schwab (EPP, Germany). The rapporteurs have remarked that a solution at international level on the two Pillars proposed by the OECD remains the preferred option, but if such a global solution will not be agreed, the EU should be ready to implement its own system for taxing the digital economy. The approval of the own-initiative report came just a couple of days before the European Council of 25-26 March, where the topic of digital tax has been discussed by EU Head of State and Government. On the same day, European Commission Vice-President for a Europe Fit for the Digital Age, Margrethe Vestager, discussed with MEPs of the FISC subcommittee on the possible Commission’s proposal for a digital levy. She highlighted that the digital levy should be compatible to the OECD solution in order to avoid discriminations and trade tensions.

The Council adopts DAC 7: new reporting obligations for digital platforms

On 22 March, the Council adopted a revision of the Directive on administrative cooperation in the field of taxation to address the challenges posed by the digital platform economy (DAC 7). The amendments to the directive create an obligation for digital platform operators to report the income earned by sellers on their platforms and for member states to automatically exchange this information. The new rules cover digital platforms located both inside and outside the EU and will apply from 1 January 2023 onwards. In addition, the new rules provide a framework for the competent authorities of two or more Member States to conduct joint audits. This framework will be operational in all member states from 2024 at the latest.

Report on post-COVID tax system discussed by FISC MEPs

On 22 March, the Subcommittee on Fiscal Affairs (FISC) of the European Parliament discussed the draft own-initiative report prepared by MEP Claude Gruffat (Greens/EFA, France) on a sustainable European tax system in the post-Covid-19 economy. The report calls for a new tax system that focuses on three main objectives: the ecological transition; reducing social inequalities; and restoring competitiveness European SMEs. The report calls for Member States to consider expanding the tax base for environmental taxes and to shift taxation from labour to capital and wealth. The reaction of the MEPs of the FISC Subcommittee was mixed. Isabel Benjumea (EPP, Spain) pointed out that the FISC subcommittee was not created to suggest that Member States should raise their taxes or target certain types of taxation. Gunnar Beck (Identity and Democracy, Germany) remarked that he would be in favour of taxing businesses that have profited from the pandemic, such as digital and pharmaceutical companies. Pedro Marques (S&D, Portugal) was rather supportive to the report, while Billy Kelleher (Renew Europe, Ireland) highlighted that the report should pay particular attention to European SMEs.