EU joins debate on digital taxation

Mon 2nd Jun 2014

The European Commission’s Expert Group on the taxation of digital goods and services issued its latest thinking on options to enable member states to capture their fair share of taxes on services provided to into their markets from international digital groups such as Google, Apple, Amazon and Skype.

Some of the key points put forward by the EC Tax Expert Group included:

  • In agreement with the OECD’s Base Erosion Profit Shifting (BEPS) project, the Expert Group does not believe it practical or appropriate to create a separate tax regime for digital companies, but to view the activities are the area to be directly addresses as so many non-traditional digital industries are employing the same platforms and business model.
  • Co-ordination with the BEPS project on transfer pricing, harmful tax competition and principles for defining the taxable presences of providers
  • Taxation of digital services should switch to the destination principle, taxing the transaction in the country of consumption – following the current indirect tax / VAT system. This contrasts with the existing origination principle for the current direct tax regime which taxes in the country of principle residence of the provider of the service.
  • Promote a harmonised direct tax regime within the EU based on the current Common Consolidated Corporate Tax Base (CCCTB)