On January 21, 2021, the Office of the US Trade Representative (USTR) published in the Federal Register individual determinations regarding whether the Digital Services Taxes (DST) of Austria, Spain and the United Kingdom are actionable pursuant to Section 301 of the Trade Act of 1974.

  • Austria: USTR has determined that Austria’s DST is unreasonable or discriminatory and burdens or restricts US commerce and thus is actionable under Section 301. Based on information obtained during the investigation, which was initiated June 2, 2020, USTR has prepared a comprehensive report on Austria’s DST (Austria DST Report). The Austria DST Report, which is posted on the USTR website, includes a full description of Austria’s DST. To summarize, Austria imposes a five percent tax on gross revenues from digital advertising services provided in Austria. The DST applies only to companies with annual global revenues of €750 million or more, and annual revenues from digital advertising services in Austria of €25 million or more.
  • Spain. USTR has determined that Spain’s DST is unreasonable or discriminatory and burdens or restricts US commerce and thus is actionable under Section 301. Based on information obtained during the investigation, USTR has prepared a comprehensive report on Spain’s DST (Spain DST Report). The Spain DST Report, which is posted on the USTR website, includes a full description of Spain’s DST. To summarize, Spain introduced a legislative proposal to establish a DST on February 28, 2020 and adopted the DST on October 7, 2020. The DST applies a three percent tax on certain digital services revenues related to online advertising services, online intermediary services, and data transmission services. Companies with worldwide revenues of €750 million or more and €3 million in certain digital services revenues are subject to the tax. The tax is expected to take effect on January 15, 2021.
  • United Kingdom. USTR has determined that the UK’s DST is unreasonable or discriminatory and burdens or restricts US commerce and thus is actionable under Section 301. Based on information obtained during the investigation, USTR has prepared a comprehensive report on the United Kingdom’s DST (UK DST Report). The UK DST Report, which is posted on the USTR website, includes a full description of the United Kingdom’s DST. To summarize, the United Kingdom’s DST was introduced as part of the Finance Bill 2020 and adopted on July 22, 2020. The United Kingdom’s DST applies a two percent tax on the revenues of certain search engines, social medial platforms and online marketplaces. The United Kingdom’s DST applies only to companies with digital services revenues exceeding £500 million and United Kingdom digital services revenues exceeding £25 million. Companies became liable for the DST on April 1, 2020.

Based on the information obtained during the investigations, and taking account of public comments and the advice of the Section 301 Committee and advisory committees, the USTR has determined that he act, policy, or practice covered in the investigation, namely the DSTs, are unreasonable or discriminatory and burden or restrict US commerce, and thus are actionable under section 301(b) of the Trade Act.

Sections 301(b) and 304(a)(1)(B) of the Trade Act provides that if the USTR determines that an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce, the USTR shall determine what action, if any, to take under Section 301(b). The notices stated that these matters will be addressed in subsequent proceedings under Section 301.