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Fair Taxation of the Digital Economy

September 2017

The Communication on ‘A Fair and Efficient Tax System in the European Union for the Digital Single Market’ was adopted on 21 September 2017.

The taxation of the digital economy is part of our fair taxation agenda.

The Commission wants an ambitious EU agenda on the matter and a common EU approach to influence the international discussions and develop meaningful solutions to taxing the digital economy to be agreed at the international level by spring 2018.

In the absence of adequate global progress, EU solutions should be advanced within the Single Market and the Commission stands ready to present the appropriate legislative proposals.

At EU level, the Common Consolidated Corporate Tax Base proposal is the Commission’s preferred option and offers a basis to address these key challenges.

The Commission believes that the CCCTB provides an EU framework for revised permanent establishment rules and for allocating the profit of large multinational groups using the formula apportionment approach based on assets, labour and sales that should better reflect where the value is created.

There is scope within the current CCCTB proposal to examine further enhancements to ensure that it effectively captures digital activities. Discussions are already underway on this in the Council and in the European Parliament.

The Commission stands ready to work with Member States in examining these options within the ongoing CCCTB negotiations, to find an ambitious and EU-law compatible approach for the Single Market.

There are also more immediate, supplementary and short-term measures that should be considered to protect the direct and indirect tax bases of Member States. 

The Commission will continue to analyse the policy options and consult with relevant stakeholders and industry representatives on this important and pressing issue ahead of possible proposals.

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