The European Commission kicked off its work on a new European digital levy by publishing an inception impact assessment on Thursday 14 January. The legislative proposal, expected in the second quarter of 2021, should contribute in particular to the reimbursement of the post-Covid-19 European Recovery Plan.
The baseline scenario will take account of developments at international level, the Commission promises. The Commission also intends to identify additional policy options, such as a corporate income tax top-up to be applied to all companies carrying out certain digital activities in the EU, a tax on revenues generated by certain digital activities carried out in the EU or a tax on digital business-to-business transactions in the EU.
The design of the initiative will have to take into account the possible impact on small and medium-sized enterprises (SMEs) on digital businesses with a dominant or weak market position and on consumers of digital content or goods, the document says.
The Commission also wants to design a measure that withstand the test of time which takes into account the future evolution of the digital economy.
As regards the legal basis, it should be noted that the Commission does not envisage using the “passerelle” clause (Article 116 TFEU), which would allow a switch to qualified majority voting in the EU Council and the ordinary legislative procedure, but hesitates between Articles 113 and 115 TFEU on the harmonisation of tax rules.
Ongoing work at the OECD on international tax reform (see EUROPE 12579/21) will be integrated into the final design of the tax, assures the Commission. “It is important not to undermine the ongoing discussions at the OECD nor to fuel international trade tensions”, the institution writes.
The proposed European levy on digital services is indeed under investigation in the United States (see EUROPE 12636/26). US authorities fear that the EU will adopt “an approach to levies on digital services that could be discriminatory, unreasonable, burdensome and restrictive to US trade”.
See the document: http://bit.ly/3idDqSm (Original version in French by Marion Fontana)