Digital Taxation: European Commission proposes new measures to ensure that all companies pay fair tax in the EU

The European Commission proposed new rules to ensure that digital business activities are taxed in a fair and growth-friendly way in the European Union. Two distinct legislative proposals will lead to a fairer taxation of digital activities in the EU:

• The first initiative aims to reform corporate tax rules so that profits are registered and taxed where businesses have significant interaction with users through digital channels. This forms the Commission's preferred long-term solution. This proposal would enable Member States to tax profits that are generated in their territory, even if a company does not have a physicalpresence there. The new rules would ensure that online businesses contribute to public finances at the same level as traditional 'brick-and-mortar' companies.
• The second proposal responds to calls from several Member States for an interim tax which covers the main digital activities that currently escape tax altogether in the EU. This interim tax ensures that those activities which are currently not effectively taxed would begin to generate immediate revenues for Member States. It would also help to avoid unilateral measures to tax digital activities in certain Member States which could lead to a patchwork of national responses which would be damaging for our Single Market.

The legislative proposals will be submitted to the Council for adoption and to the European Parliament for consultation. The EU will also continue to actively contribute to the global discussions on digital taxation within the G20/OECD, and push for ambitious international solutions.