By Julie Martin, MNE Tax
French and German finance ministers on Tuesday presented yet another compromise proposal for an EU-wide digital services tax, this time suggesting that the short-term tax apply only to advertising revenue.
Thus, under this latest Franco-German proposal, the digital services tax would not apply to revenue from sales of data or online platforms, such as Airbnb or Lyft, as was the case in the original EU Commission proposal for a directive, offered in March.
The compromise declaration, presented yesterday at a meeting of the European Union’s Economic and Financial Affairs Council (ECOFIN) in Brussels, aims to restart negotiations on the short-term EU tax which have stalled in the face of opposition from Ireland, Denmark, Sweden, and Finland.
Austrian Federal Minister for Finance Hartwig Löger reported that there was broad support from all countries at the ECOFIN meeting to work on the Franco-German proposal, which would be treated as an amendment to the original digital tax proposal rather than as an alternative proposal.
Further discussion of the matter will likely occur in February or March, Löger said.
Like the original EU Commission proposal, the compromise proposal envisions a 3 percent tax on turnover that would apply only if international consensus can not be reached on a long-term solution to tax digital firms.
In their declaration, France and Germany pressed for swift action.
“We urge the Council to adopt the legally binding directive on DST without delay and in any case before March 2019 at the latest. It will enter into force on 1st January 2021, if no international solution has been agreed upon,” the agreement states.
The declaration also urges that a long-term solution to the issue of digital firm taxation include a minimum tax. French and German officials have previously expressed interest in the use of such a tax to update the international tax rules.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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