EU Delays Digital Levy Plans

Latest reports indicate that the EU has delayed the release of its digital levy proposal until at least autumn, pending further discussion with the US. It was anticipated that the draft proposal for the EU digital levy would be published in the coming week. 

In January, the EU Commission’s DG TAXUD published an inception impact assessment roadmap revealing that a proposal for a digital levy would be introduced later in 2021, intended to sit alongside any multilateral digital tax measures agreed at OECD level, in order to introduce an EU-own revenue source to aid in the recovery from the economic impact of the COVID-19 virus. Speaking after the March ECOFIN meeting on behalf of the Commission, Executive Vice-President Dombrovskis stated “…as mandated by the European Council, we are continuing preparations for proposing an EU digital levy, to serve as an EU own resource by 2023. We will ensure that this will complement the OECD process and be WTO-compatible. The crisis makes it even more important to agree on the taxation of digital businesses and other issues such a minimum tax rate. This is both in order to secure much-needed tax revenues and to make sure that everyone pays their fair share of tax.”

However, as negotiations on the OECD’s two-pillar plan progress closer to final agreement, the EU has come under increasing pressure from the US to abandon its digital levy plans in order for a multilateral solution to be agreed at a global level. Pascal Saint-Amans commented on the delay in the plan, saying: “The postponing of the EU digital levy is good news. It is wiser indeed to wait for the deal to be finalised and not risk any disruption with ongoing complicated legislative processes.”

U.S. Treasury Secretary Janet Yellen travelled to Europe this week, in order to attend the G20 meeting in Venice on 9 July, and today held a series of bilateral meetings with European Commission officials, at which it was expected this issue would be discussed. 

Ref. CFE’s Tax Top 5 – 12 July 2021