European Finance Ministers will be asked to make a final attempt to agree on a European solution regarding taxation of digital giants on Tuesday 12 March.
According to a European source, a discussion on the text itself is not really expected, any more than an agreement. The logic of the Romanian Presidency of the Council of the EU would rather be to show that "nothing more" can be done and therefore to put this issue on "pause", pending progress in the international negotiations on digital taxation at the OECD (see EUROPE 12183/18), they explained on Friday 8 March.
Since the December Ecofin Council, discussions have been held on the basis of the Franco-German proposal for a tax on online advertising (see EUROPE 12152/1) and no longer on the European Commission's proposal for a tax on digital services (‘Digital services tax’ or DST - see EUROPE 11986/10).
The French Finance Minister, Bruno Le Maire, a staunch defender of a European, or even an international solution, himself admitted that there would not be a unanimous agreement on Tuesday at EU level (see EUROPE 12204/23). On Wednesday, France unveiled its own project for the taxation of large digital companies at national level (see EUROPE 12208/14).
And as a result, the situation has not really changed. Ireland, Finland, Denmark and Sweden maintain their opposition in principle. Some small countries remain sceptical about the very low income that such a tax could generate in relation to the cost of its implementation and they would like to see the tax thresholds reviewed.
The compromise text - dated 1 March and copied to EUROPE - shows how far technical work has progressed on a tax that is unlikely to be introduced.
According to the text, the rate of this tax, which would only apply to income derived from the placement of advertising on a digital interface intended for users of this interface, is still 3%.
Nor have the tax thresholds been changed in accordance with the DST proposal. The tax would apply to very large companies with an annual worldwide turnover of more than €750 million, of which only €50 million is taxable in the European Union.
The text also maintains the recital that was added by the Member States to clarify that the Directive does not prevent Member States from maintaining or introducing national taxes in this field, provided that they do not cover the same services as the European tax and that they are not limited only to digital companies (see EUROPE 12148/12).
Several countries were also concerned about the consequences of excluding the sale of user data from the scope of the Directive. The text then introduces an 'anti-abuse' clause to ensure that taxpayers cannot circumvent the tax through specific commercial arrangements regarding the sale of data. It states that "such arrangements should be ignored to the extent that they are not put in place for valid commercial reasons which reflect the economic reality".
Regarding the transposition deadline, the text also largely reflects the solution towards which Member States were moving for the DST, namely: - adoption of the necessary provisions by Member States by 31 December 2021 at the latest and; - the practical application of the rules from 1 January 2022.
The Directive would expire upon the entry into force of the new international standards agreed at the OECD or at the latest on 31 December 2025. (Original version in French by Marion Fontana)