Weekly Tax News – 3 September 2018

September 3, 2018

European Parliament starts its discussions on digital taxation

On 29 August, the MEPs of the ECON committee of the European Parliament had an initial exchange of view on the Commission’s two proposals on the taxation of the digital economy.

The rapporteur of the “Corporate taxation of a significant digital presence” (the so-called comprehensive solution), MEP Dariusz Rosati (EPP, Poland), highlighted the necessity of acting in order to ensure a level playing field between traditional businesses and digital ones within the EU. Furthermore, he questioned the relevance of the thresholds (i.e. turnover, number of contracts and number of users) that should be used as criteria to determine the establishment of digital presence, according to the proposal. Finally, MEP Rosati stated that it would be good to know if there are real chances in the Council to agree on a common position on this proposal.

With regard to the interim solution, consisting in a 3% tax on the turnover of the activities of digital platforms, the rapporteur Paul Tang (S&D, Netherlands) asked if a rate of 3% is enough, giving the huge revenues of the digital giants. Furthermore, he proposed to set a minimum rate, leaving the Member States to set up higher tax rates, if they so wish.

The next stage of the discussions, will be a public hearing on Monday 10 September. The draft reports for the opinion are expected to be ready in early October, with a view to a vote at the ECON committee in December and a plenary in January.

European Commission approved Greek system of tax on casino

On 9 August, the European Commission approved the Greek regime of tax on casino admission fee, in force between 1995 and 2012. The system consisted in the requirement of an admission fee to the customers, 80% of which was then paid back to the Greek State. Following a complaint, the Commission opened an investigation and, in May 2011, found that the system constituted State aid incompatible with EU rules. The decision was overturned by a judgement of the General Court of the EU in September 2014, upheld by the Court of Justice of the EU in October 2015. The decision of 9 August is therefore in line with these judgements.

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Court of Justice of the EU judged over Spanish tax leasing scheme

On 25 July, the Court of Justice of the European Union (CJEU) overturned the judgement of the General Court of the European Union on the Commission’s decision that the Spanish tax lease system constituted State aid. The original decision dates back to 2013, when the European Commission took the view that three of the five measures of the Spanish system were incompatible with EU State aid rules. Spain and the private entities involved appealed against this decision before the General Court, which decided in their favour in 2015. The Commission then appealed to the CJEU, that has now overturned the judgement of the General Court. The case has therefore been referred back to the General Court.

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