Update_Digital Tax Package

The European Commission (EC) released its Digital Tax Package on 22 March 2018.

Purpose of the Package is to ensure taxation at the place of value creation in a digital economy context. To this end, both long-term and short-term solutions have been envisaged.

As regards long-term measures, the Package includes Proposal for a Directive laying down rules relating to the corporate taxation of a significant digital presence. This proposal envisages extension of the permanent establishment (PE) concept to significant digital presence, i.e. business activities (i) consisting wholly or partly in digital services’ supply through digital interface and (ii) meeting specific thresholds related to total revenue or number of users or number of business contracts. The proposal includes also new profit attribution rules, taking into account value generated from data, users etc.

For the short term, the Package includes Proposal for a Directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services. This proposal envisages as a temporary solution a digital services tax (DST) at an EU-wide rate of 3% on gross revenues from specific digital services. DST should apply only to entities meeting two thresholds: (i) total annual worldwide revenue > €750,000,000, and (ii) total taxable revenues in EU > €50,000,000.

For further information please refer to the relevant webpages of the EC:

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