While all eyes are on the discussions in the Council on the taxation of the digital sector (see EUROPE 12139), the European Parliament is also not in agreement on this subject. This was apparent on Monday 19 November from the examination of amendments tabled to the draft reports by Dariusz Rosati (EPP, Poland) and Paul Tang (S&D, Netherlands) in the European Parliament's Committee on Economic and Monetary Affairs (ECON).
On Dariusz Rosati's report on the long-term 'structural' solution, 120 amendments have been tabled. Many of them aim to make a link with the Common Consolidated Corporate Tax Base (CCCTB) and the work underway within the OECD.
Political negotiations have already begun and after a first meeting between shadow rapporteurs, 11 compromises could already have been reached. They cover: - the scope and definition of 'significant digital presence'; - a revision clause three years after the implementation of the Directive; - a “certain type” of 'sunset clause'.
Germany's Wolf Klinz (ALDE) has tabled several amendments proposing to reject the Commission's proposal.
DST. It is not so much on this issue that major divisions are expected, according to a European source, but on the ‘interim’ solution aimed at taxing at 3% (see EUROPE 11986) the gross income from the activities of digital platforms (‘digital services tax' or DST).
183 amendments have been tabled. On the proposals of the rapporteur, Paul Tang, to raise the tax to 5% and to extend the scope of the tax to include the provision of video, audio or text content using a digital interface and the sale of goods or services contracted online via e-commerce platforms (see EUROPE 12111), a dividing line seems to be emerging with the EPP.
Overall, the group believes that Parliament - even if it is only consulted on the issue - must be "realistic” if it really wants to contribute to the debate. It is for this reason that it calls for a detailed impact study on these measures. But Paul Tang does not seem to cede, believing that this would risk blocking the process.
Alain Lamassoure (EPP. France) was more conciliatory than other MEPs in his group. “Indeed, we would need impact studies, we will not have them... but that being said, since this is a tax whose return should not exceed a very small number of billions of euros of return at EU level... the economic consequences will not be tragic,” he estimated.
The rapporteur also found particularly interesting the proposal by Esther de Lange (EPP, Netherlands) to lower the threshold for taxable income to €25 million and, to protect small businesses, to set the DST rate at 3% for taxable income between €25 million and €100 million and 5% for income above €100 million. This solution could be combined, according to her, with an annual tax allowance of 750,000 euros to further protect small businesses.
The ALDE group seems to prefer a limitation of the tax to companies with a total turnover of more than €750 million and the maintenance of the 3% rate, while the Greens/EFA have been in favour of a 5% rate, but prefer to limit the tax to companies with a total amount of taxable income exceeding €50 million.
Germany's Wolf Klinz (ALDE), Sweden's Gunnar Hökmark (EPP) and Portugal's Miguel Viegas (GUE/NGL) called on the European Commission to reject the proposal, favouring a decision at the OECD.
“To want the OECD to give its opinion before the EU is to take a stalling position. Those who defend this thesis, in reality, do not want a tax at all”, reacted Alain Lamassoure (EPP, France).
A dividing line that is not unlike the discussions in the Council, even if the German line is moving (see other news).
The ECON Committee MEPs will vote on 3 December, the day before the crucial ECOFIN Council meeting. (Original version in French by Marion Fontana)