On 29 January, the OECD issued a press release highlighting the important progress made in addressing the tax challenges linked with the digitalisation of the economy. The countries involved have agreed to continue the work towards a consensus-based solution in 2020. Two central pillars were identified in a Policy Note released by the OECD in January: (i) a revision of the “nexus” rules and the rules to allocate the profit among different jurisdictions, based on the concepts of marketing intangibles, user contribution and significant economic presence; (ii) the re-examination of rules designed to give jurisdictions a remedy in cases where income is subject to no or only very low taxation.
The French Minister of Economy and Finance, Bruno Le Maire, who intends to introduce a tax on digital services at national level, welcomed the announcement and relaunched in parallel for an agreement at the European level in March on the taxation of online advertising.
On 23 January, the Austrian Economic Center (a politically independent research institute committed to disseminating the ideas of the Austrian School of Economics) published a study criticising the roadmap proposed by the European Commission to shift away from unanimity principle for tax matters. In particular, the report highlights that qualified majority voting in tax would imply a major intrusion of the European Union on the sovereignty of EU Member States. Furthermore, it argues that the Single Market was created to reduce barriers and enhance competition, whereas a Single Market on tax could hamper EU competition at global level. Finally, from a political point of view, the Austrian Economic Center points out that this proposal is not backed by many Member States, in particular in the North of Europe and could affect the support of those countries towards the European Union.
On 24 January, the European Parliament and the Council had constructive first inter-institutional negotiations on the 'Fiscalis' programme for the period 2021-2027, which aims at promoting cooperation between EU tax administrations. There are still some points to be clarified in terms of reporting, transparency and delegated acts. Furthermore, discussions are still expected on the text adopted by the European Parliament that proposes to encourage the implementation of specific actions with the participation of the least developed third countries. The second (and possibly last) 'trilogue' is expected during the second half of February.
