Weekly Tax News – 5 November 2018

November 5, 2018

The Council is making progress on the Digital Services Tax

On Tuesday 6 November, the European Finance ministers will discuss the Commission’s proposal for a 3% tax on the turnover of the activities of digital platforms. A note of the Austrian Presidency invites the ministers to reiterate their determination to reach an agreement ahead of the ECOFIN Council of December and to take position about two topics: the scope of application and the sunset clause.

The firs topic focuses on the exclusion of data sales from the scope of application. The French minister, Bruno Le Maire, tried to convince Germany that DST would have no impact on the German car industry.

On the sunset clause, there are two options on the table. The first is an automatic expiry date, together with a statement by the Council calling upon the Commission to repeal the directive before such date if an overall solution is reached in the framework of the OECD. The second is a revision clause requiring the Commission to submit a report to the Council evaluating how the OECD is progressing on this matter 18 months before a certain date.

Further progresses are reported in the framework of the collection of tax, where the Member States are opposing the creation of the “one-stop-shop” proposed by the Commission because it would be too costly and burdensome for the interim nature of the digital services tax.

United Kingdom to introduce taxation of digital services in 2020

On Monday 29 October, the British Chancellor of the Exchequer, Philippe Hammond, in his budgetary declaration at the House of Commons, announced the creation of a tax targeting the internet giants. The proposal is not far from the one currently under discussion at EU level, it sets a tax rate of 2% and it would be applicable to companies with a global turnover exceeding £500 million. The tax will apply on the revenues generated from the data of British users collected by search engines, social media platforms or online marketplaces.

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