European Parliament agrees on new rules to tax digital companies’ revenues

Written by on December 13, 2018 in Europe - Comments Off on European Parliament agrees on new rules to tax digital companies’ revenues

The European Parliament adopted on December 13, by an overwhelming majority, both its two opinions on the proposals for European Council directives on the corporate taxation of a significant digital presence and a Digital Services Tax (DST).

MEPs added to the list of services that qualify as taxable revenues the supply of “content on a digital interface such as video, audio, games, or text using a digital interface”, regardless of whether the content is owned by that entity or if it has acquired the rights to distribute it. Online platforms selling digital content, such as Netflix, can therefore be taxed.

MEPs agreed to reduce the minimum threshold above which a company’s revenues are liable to be taxed. The rules would apply to any entity generating revenues within the EU of more than 40 million euro during the relevant financial year. The European Commission had proposed that this should be 50 million euro.

MEPs underlined that the DST is a temporary measure. Adopting the Significant Digital Presence, the Common Corporate Consolidated Tax Base or similar rules reached at the OECD or at UN level would be permanent solutions.

The European Parliament has a consultative role when it comes to taxation laws. Therefore, it will be up to the European Council to decide by unanimity on the final content of the rules. The European Parliament is pushing for an approval before the end of its term of office in April 2019.

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