The EU has long since recognised the digital economy as an important source of growth for the EU. One of the focuses of the EU Commission is on developing tax policy to deal with this “new” economy. The EU Commission states its aim is to support rather than hamper the growth of the digital economy in the EU but to ensure that the digital economy contributes its fair share to public finance.
The Commission perceives corporate tax avoidance and aggressive tax planning as particularly problematic in the digital economy.
Last October the Commission set up the High Level Expert Group on Taxation of the Digital Economy to examine the issues relating to taxation of the digital economy in the EU.
The report the Group has produced (released on 28 May 2014) covers taxation issues linked to the digital economy in the broadest sense, looking at indirect and direct taxation as well as ways tax policy can help maximise the opportunity of the digital economy. Among the main conclusions of the report are that:
- the digital economy does not require a separate tax regime;
- the introduction of a destination-based VAT system for digital services could be expanded to all B2C supplies of goods and services;
- a destination-based corporation tax could be considered in the future; and
- the BEPS project will be fundamental in relation to corporation tax in tackling tax avoidance and aggressive tax planning globally.
The Commission is considering the report and we expect it to release its proposed new tax policies in due course.
Please click here to view the full report.