On 3 May, Agata Pavía, Head of FleishmanHillard’s Technology Team and Bertrand Huet, Co-head of FleishmanHillard’s Financial Services and Head of Taxation, hosted the Commission for a private Roundtable on the Commission’s short and long-term proposals to tax the digital economy. There were over 40 participants, including stakeholders from different business sectors, as well as representatives from the European Parliament and Member States.
After a brief introduction by FleishmanHillard on the political backdrop and challenges ahead for the digital taxation debate, the Commission presented the new proposals and the rationale behind them. The Commission explained that it had been assessing digital tax for some years already and had concluded that the digital sector needed bespoke rules when it comes to taxation. The Commission further commented on the link between the digital taxation initiative and the ongoing negotiations to establish a Common Consolidated Corporate Tax Base (CCCTB), and provided clarification on the criteria to be used to identify profit allocation.
The Q&A session that followed showed particular interest from the audience in better understanding
- the interaction between the short and long-term proposals, as well as between EU, national and international (OECD) developments on digital taxation.
- why Fintech had been scoped out
- how the proposed thresholds would provide for a level playing field in Europe, in particular relating to the challenges of establishing a significant digital presence in small Member States
- how to avoid the risk of double taxation.
- how the Commission will ensure the enforcement of the tax in the future
- more generally, how the legislative process may develop over the coming months.
While overall participants agreed on the need to adjust the current EU and international tax systems to take account of the digital transformation, the discussion revealed a significant number of technical and political challenges ahead before an agreement can be reached on how to get there.
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October 19, 2020