HomeInsightsEuropean Commission consults on how to tax the digital economy fairly and effectively

Article by

The Commission has launched a public consultation on how the EU can ensure that the digital economy is taxed in a fair and growth-friendly way. Taxing the digital economy has become an issue of pressing importance, politically and economically, the Commission says.

The Commission says that the current tax framework does not fit with modern realities. It was designed in a pre-computer age and cannot capture activities that are increasingly based on intangible assets and data. As a result, there is the risk of shrinking tax bases for Member States, competitive distortions for businesses and obstacles for innovative companies.

As set out in the Commission’s Communication on Digital Taxation, solutions to taxing the digital economy should ideally be found at international level, given the global nature of the problem. However, the EU also needs to develop its own coherent approach to this challenge, to ensure the fair and effective taxation of all companies and to support the Digital Single Market. As requested by leaders at the European Council on 19 October 2017, the Commission is working on new proposals on digital taxation, which it will present in early 2018.

The Commission is particularly interested in gathering views on the main problems related to taxing the digital economy, for Member States and business. It also asks for feedback on possible solutions to these problems, both targeted, temporary measures and comprehensive long-term solutions. The consultation will feed into the work under way on the digital taxation proposals for next year and runs until 3 January 2018. To read the Commission’s press release in full and for a link to the consultation, click here.