What you need to know
- The EU has today adopted sweeping new tax measures.
- They are designed to promote "fair, efficient and sustainable taxation."
- Measures include the automatic sharing of income and revenue data generated by sellers on digital platforms amongst member states.
The EU is today adopting a series of sweeping new tax measures, which will include increased scrutiny on the revenue and sales of digital platforms like the App Store and Google's Play Store.
In a statement released today, the EU Commission stated:
The European Commission has today adopted an ambitious new Tax Package to ensure that EU tax policy supports Europe's economic recovery and long-term growth. The Package is built on the twin pillars of fairness and simplicity. Fair taxation remains a top priority for the European Commission, as a means of protecting public revenues, which will play an important role for the EU's economic recovery in the short-run and prosperity in the long-run.
The package seeks to "boost tax fairness" by clamping down on tax abuse, curbing unfair competition, and increasing tax transparency. You can bet your bottom dollar that in the wake of Apple's massive EU tax ruling earlier today, the timing of this announcement is not a coincidence.
Of note to companies like Apple and Google, are proposals on administrative cooperation, extending EU tax transparency rules to digital platforms:
The proposal on administrative cooperation (DAC 7) extends EU tax transparency rules to digital platforms, so that those who make money through the sale of goods or services on platforms pay their fair share of tax too. This new proposal will ensure that Member States automatically exchange information on the revenues generated by sellers on online platforms. The proposal also strengthens and clarifies the rules in other areas in which Member States work together to fight tax abuse, for example through joint tax audits.
The proposals to revise administrative cooperation amongst member states is one of three key elements to the new tax package, and the introduction of an automatic exchange is a fundamental aspect of this. The full plan states:
Introduce an automatic exchange of information between Member States' tax administrations for income/revenues generated by sellers on digital platforms. Information will help tax administrations verify that those who earn money through digital platforms pay the appropriate share of taxes
The EU has previously said it is willing to move forward with the taxation of digital services with or without the cooperation of the U.S. government. The EU says the measures will "help Member States be better equipped to fight tax evasion, without unduly burdening platform operators."