Weekly Tax News – 26 March 2018

March 26, 2018

Fair taxation in a digitalised world: European Commission proposals

On 21 March, the European Commission has published its proposals to ensure a fair taxation of the digital economy. The overall initiative consists of two proposals and a recommendation:

Proposal on long-term solution: it aims at reforming the corporate tax rules by including the concept of digital presence in order to tax the profits that are generated in a territory where a company does not have any physical presence. A significant digital presence would be recognised in a Member State if one of the following criteria is met:

  • The annual revenues of the digital platform exceed €7 million in a Member State;
  • The digital platform has more than 100.000 users in a Member State in a taxable year;
  • Over 3.000 business contracts for digital services are created between the company and the users in a taxable year.

According to the Commission, this measure could be integrated into the scope of the CCCTB.

Proposal on short-term solution: it consists of a tax (so-called “interim tax") with a tax rate of 3% on certain revenues from digital activities where the user plays a major role in the value creation. It shall be collected by the Member State where the users are located. It will apply to companies with global revenues exceeding €750 million and EU revenues exceeding €50 million. The tax will apply to revenues from:

  • The sale of online advertising spaces;
  • The activities of digital intermediaries allowing users to interact with each other and thus facilitating the sale of goods and services between them;
  • The sale of data generated from user-provided information.

Recommendation: it defines how to review bilateral agreements between an EU Member State and a third country for them to be in line with the proposed directives.

Next Steps: These proposals will now be submitted to the Council for adoption and to the European Parliament for consultation.

Read on

The European Parliament appointed TAX3 chair and vicechairs

On 22 March, the TAX3 committee held its first meeting. Petr Ježek (ALDE, Czech Republic) was appointed as a chair of the committee. The following MEPs were also appointed: Roberts Zile (ECR, Latvia) as a first vice-chair, Eva Joly (Greens/EFA, France) as a second vice-chair, Esther de Lange (EPP, Netherlands) as a third vice-chair and Ana Gomes (S&D, Portugal) as a fourth vice-chair.

Read on the list of MEPs making up the TAX3 committee

Guidelines on new requirements against tax avoidance in blacklisted countries

On 21 March, the European Commission has published a communication on new requirements against tax avoidance in EU legislation concerning in particular financing and investment operations. These guidelines describe how projects involving entities from the jurisdictions of the nine countries in question should be analysed. This assessment should be carried out to ensure that the projects are not arranged in a way that promotes tax avoidance. It is worth mentioning that the list of non-cooperative jurisdictions was modified in March 2018 and the nine currently listed are: American Samoa, the Bahamas, Guam, Namibia, Palau, Samoa, St Kitts and Nevis, Trinidad and Tobago and the American Virgin Islands.

Read on

IMCO Committee rejected the services e-card

On 21 March, the MEPs of the IMCO committee voted 21 to 13 to reject the two legislative texts on the services e-card. After this rejection, the proposal is expected to be put aside for an uncertain period of time.

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