ECOFIN Council Announces The Possibility Of Implementing An EU Digital Tax This Year

An informal meeting of the Economic and Financial Affairs Council (ECOFIN) took place in Vienna. At the end of the second day, Hartwig Löger, Austria’s Finance Minister, announced that an agreement to implement a digital tax by the end of 2018 is realistic.

Digital Services Tax

The digital tax is the interim solution proposed by the European Commission, which leads to the taxation of digital activities in the Member States. The European Union needs a modern taxation system, which reflects the developments in economy. One of the main developments is that companies and entrepreneurs are increasingly operating in the digital environment. The tax applies to sales generated by activities where users contribute a significant portion of the value added. In accordance with the proposal of the European Commission, only those companies that have worldwide revenues amounting to at least 750 million Euro and EU sales of at least 50 million euro will be subject to such tax.

Progress on Commitment to Tax the Digital Economy Fairly

During the Council, there was broad agreement in particular to prepare further measures against no-tax and low-tax systems. According to the press remarks by Vice President Valdis Dombrovskis, the European Commission fully supports the Austrian Presidency in its efforts to swiftly adopt the EU proposal for an interim solution – a digital services tax while working towards a long-term solution on digital taxation, preferably in the OECD or at G20 level.

"It also emerged from the discussion that we, the EU 27, should develop the EU's position as unified as possible in the OECD on these issues," said Löger. This also underlines the position of France and Germany, who proposed a so-called "sunset-clause". This means that there should be a limit on digital tax until an agreement has been reached at international level.

Sources: Bundesministerium Finanzen , European Commission

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