Taxation of the Digital Economy. European Commission report


The European Commission has published today a press release concerning the final report of the High-level Expert Group on Taxation of the Digital Economy.

Through this report the independent group do examine key issues related to taxing the digital economy in the EU.

The report try to covers taxation issues linked to the digital economy in the broadest sense, looking at indirect (VAT) and direct (corporate) taxation. According to the press release, the main conclusions of the report are:

  • “The digital economy does not require a separate tax regime. Current rules may need to be adapted to respond to the digitisation of our economy.
  • Digitisation greatly facilitates cross border business. Removing barriers to the Single Market, including tax barriers, and creating a more favourable business environment through neutral, simplified and coordinated tax rules is therefore more important than ever.
  • The upcoming move to a destination-based VAT system for digital services is commended, along with the simplification that the mini-One Stop Shop will bring for businesses. The report recommends that this could be further expanded to all goods and services (in business-to-consumer transactions) in the future.
  • To ensure neutrality and provide a level playing field for EU business, the Group recommends the removal of the VAT exemption for small consignments from non-EU countries. This would be supported by a One Stop Shop and a fast track customs procedure.
  • In the area of corporate taxation, the G20/OECD Base Erosion and Profit Shifting (BEPS) project will be fundamental to tackling tax avoidance and aggressive tax planning globally. The report strongly recommends that Member States take a common position to ensure a favourable outcome for the entire EU.
  • Priority areas for the EU within the BEPS project, according to the report, are countering harmful tax competition, revising transfer pricing rules and reviewing the concepts for defining and applying taxable presence.
  • The Common Consolidated Corporate Tax Base provides an opportunity for the EU to expand on new international standards (such as transfer pricing profit split methods) and achieve additional simplification within the EU.
  • More radical reforms of the tax system could also be looked at in the longer term, including a destination-based corporation tax.”

Herein is included a link to the report in English language.

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