Loyens & Loeff

Digital Economy Tax

Tax challenges of the digitalizing economy

Since the summer of 2017, addressing the tax challenges of the digitalizing economy has become a priority within the OECD as well as within the EU. Both the OECD and the EU have launched public consultations (the EU consultation closes on 3 January 2018) and developments follow each other rapidly.

Politically it is clear that the EU wants to levy more tax from ‘digital companies’. Technically, this is a challenge indeed, as the current international tax framework does not facilitate this. So far, each of the options suggested to tax digital companies has substantial downsides. They may result in arbitrary taxation, inequities, double or cascading taxes, et cetera. Moreover, it seems very difficult, if not impossible, to ring-fence the digital economy in a meaningful way.

Fundamental changes seem to be required to achieve the political goals. This could affect both digital and non-digital companies.

At Loyens & Loeff, we monitor these developments closely and are at the forefront of the discussions. Our experts on the topic will be happy to inform you in more detail on these developments and how they can affect your business.



Tax Challenges of the Digitalisation of the Economy – new OECD work programme

 

On 31 May 2019, the OECD published its programme of work for developing a solution to the tax challenges arising from the digitalisation of the economy (Programme of Work). The Programme of Work will explore technical issues in line with the ‘two-pillar’ approach set out in the OECD policy note of 29 January 2019 and the OECD public consultation document of 13 February 2019. Pillar One seeks to develop new profit allocation rules. Pillar Two focuses on achieving a minimum income taxation for multinational enterprises (MNEs). The Pillars go beyond the taxation of digital services and BEPS recommendations. The OECD aims at reaching a consensual solution by 2020.

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OECD Public Consultation on Addressing the Tax Challenges of the Digitalisation of the Economy

On 13 February 2019, the OECD outlined three policy options addressing tax challenges posed by the increasing digitalisation of the economy. The OECD also asked for feedback on two measures aimed at tackling remaining BEPS issues, which would effectively amount to a minimum taxation of cross-border profits. The OECD’s earlier policy note published on 29 January 2019 already hinted at this ‘two-pillar’ approach set out in the consultation paper (see our update here). Most policy measures presented in this paper would have a broad impact, affecting companies beyond the taxation of digital services.

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Taxing the digital economy under discussion in the EU

 

The EU wants to levy more tax on profits generated through the digital economy in the EU. The Ecofin Council has agreed to aim at reaching a “common understanding” by December 2017. The EU Commission released a communication on a fair and efficient taxation of digital economy businesses ahead of the EU Tallinn Digital Summit on 29 September 2017.

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OECD Public Consultation on Addressing the Tax Challenges of the Digitalisation of the Economy

The OECD outlined three policy options addressing tax challenges posed by the increasing digitalisation of the economy. The OECD also asked for feedback on two measures aimed at tackling remaining BEPS issues, which would effectively amount to a minimum taxation of cross-border profits.

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New OECD policy note on the taxation of the digitalisation of the economy

Another step in the OECD's process regarding the taxation of the digital economy. In this article you can find out 'what's new and what's next'.

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Public consultation European Commission regarding the fair taxation of the digital economy

public-consultation-european-commission-regarding-the-fair-taxation-of-the-digital-economy

Loyens & Loeff submitted a position paper in response to the EU Commission's public consultation regarding the fair taxation of the digital economy. This article summarizes our contribution.

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Taxation within the EU of digital companies: options and implications

On 21 September 2017, the European Commission listed several options to tax companies active in the digital economy. What would these options mean for your business? We wrote a series of ‘Tax Bits’ in which we assess all the options the Commission has put forward.

Option I – Equalisation Tax

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Option II – Withholding Tax on Digital Transactions

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Option III – Significant Economic Presence (Virtual Permanent Establishment)

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Taxation of digital economy: further update on developments in the European Council's ECOFIN

taxation-of-digital-economy-further-update-on-developments-in-the-european-councils-ecofin

The results of the 5 December meeting of the European Council’s Economic and Financial Affairs Council (ECOFIN) are out, and we’ve highlighted the major points of interest.

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Taxation of digital economy: OECD and European Council updates

taxation-of-digital-economy-oecd-and-european-council-updates 

Developments in respect of the taxation of the digitalizing economy follow each other rapidly. The key question remains: is ring-fencing the digital economy an option? Read more about the position of the OECD and the European Council in this update. 

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Public consultation OECD regarding the tax challenges of the digitalised economy

public-consultation-oecd-regarding-the-tax-challenges-of-the-digitalised-economy

On 13 October 2017, the public consultation launched by the OECD regarding the tax challenges of the digitalised economy (the Consultation) closed. Loyens & Loeff submitted a position paper in response to the OECD’s request for input. Read the summary.

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EU Commission sets out options for fair taxation of digital economy

The EU Commission released a communication on a fair and efficient taxation of digital economy businesses ahead of the EU Tallinn Digital Summit on 29 September 2017.

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Ecofin agrees that ‘digital economy’ companies should pay more tax in the EU

ecofin-agrees-that-digital-economy-companies-should-pay-more-tax-in-the-eu

Ecofin agreed that companies active in the ‘digital economy’ in EU countries should pay more tax. A quick pace of change?

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Dutch opposition party announces initiative bill on Digital Services Tax



On 25 April 2019, the Dutch opposition party PvdA announced it would publish an initiative bill to introduce a Digital Services Tax (DST), similar to initiatives in other EU jurisdictions and to the proposal the European Commission launched in March 2018.

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