Austria, France, Italy, Spain, the United Kingdom and the United States announced on Thursday 21 October that they had reached an agreement on the transitional application of the digital levies in place in the first five countries until Pillar I (reallocation of taxation rights) of the reform of international business taxation agreed in early October by 136 countries at the OECD (see EUROPE 12808/2) is implemented.
Under the terms of the agreement announced on the eve of the G7 Trade Summit in London, digital giants will continue to pay the tax applicable in the four EU countries and the UK. However, they will receive partial credit on the calculation of their tax liability when the international tax reform is in place.
In return, the US is ending the tariffs put in place by the Trump administration when these countries introduced their digital levies, but which the Biden administration suspended in order to facilitate an international agreement at the OECD (see EUROPE 12688/23, 12526/6).
According to the French Ministry of Finance, this compromise puts an end to the threat of trade sanctions and reaffirms the commitment of the parties to adhere to an ambitious timetable of future international standards.
At the end of October, the G20 summit will be asked to endorse the international tax reform that could be applicable from 2023.
See the joint declaration of the six countries: https://bit.ly/2ZbYALF (Original version in French by Mathieu Bion)