Announced, Proposed, and Implemented Digital Services Taxes in Europe

July 18, 2019

Last year, the European Union (EU) released a proposal to tax revenues from certain digital activities of multinational corporations. However, the EU could not reach an agreement on the digital services tax proposal. Although the OECD is currently working on an international solution for digital taxation, some countries have recently taken unilateral measures to implement a digital services tax. As shown in the following map, several European countries have either announced, proposed, or implemented such a tax unilaterally.

Digital service taxes, digital taxes, Digital tax europe, France digital tax, UK digital tax

France is the most recent country to approve a digital services tax, despite the United States Trade Representative opening an investigation into the discriminatory nature of the tax. Hungary has previously implemented a type of digital services tax.

Austria, Belgium, the Czech Republic, Italy, Poland, Slovenia, Spain, and the United Kingdom have all either announced or published a proposal to introduce a digital services tax.

Sources: KPMG, “Taxation of the digitalized economy,” July 11, 2019, https://tax.kpmg.us/content/dam/tax/en/pdfs/2019/digitalized-economy-taxation-developments-summary.pdf; Bloomberg Tax, “BEPS Tracker – Action 1: Digital Economy,” https://www.bloomberglaw.com/product/tax/aqb_chart/2917a095db6af1d712cbf7034d7be88d; Finance Ministry of Slovenia, “NEWS – Adopted at the 36th regular government session,” June 6, 2019, http://www.mf.gov.si/si/medijsko_sredisce/novica/3621/.

Country Global Revenue Threshold Domestic Revenue Threshold Tax Rate Scope Status

Austria (AT)

€750 million

€10 million

5%

Online advertising

Proposed

Belgium (BE)

€750 million

€50 million in the EU

3%

Selling of user data

Proposed

Czech Republic (CZ)

€750 million

€2 million

7%

· Placing targeted advertising on digital interfaces

· Use of multilateral digital interfaces

· Sales of data collected about users of digital services

Announced

France (FR)

€750 million

€25 million

3%

· Provision of a digital interface to enable users of platforms to interact with each other in order to exchange goods or services

· Advertising conducted on digital interfaces

· Resale and management of personal data for advertising purposes

Approved by French Senate and National Assembly. Waiting for President Macron’s signature to be enacted.

Hungary (HU)

100 million HUF (€306,890)

N/A

7.5%

Advertising revenue

Implemented

Italy (IT)

€750 million

€5.5 million

3%

· Advertising on a digital interface

· Multilateral digital interface that allows users to buy/sell goods and services

· Transmission of user data generated from using a digital interface

Proposed

Poland (PL)

Deputy finance minister indicated that Poland will introduce digital taxation. A formal proposal is expected.

Slovenia (SI)

The Slovenian Ministry of Finance on June 20 announced a government proposal to submit a draft bill to the National Assembly introducing a digital services tax. No details published yet.

Spain (ES)

€750 million

€3 million

3%

· Online advertising services

· Selling of online advertising

· Selling of data

Proposed

The Spanish Parliament rejected the government’s proposed budget bill for 2019, which included the digital services tax. However, the DST discussion will likely be re-introduced.

United Kingdom (GB)

£500 million (€554 million)

£25 million (€28 million)

2%

Revenues of search engines, social media platforms, and online marketplaces

Proposed

The OECD is hopeful there will be a solution to reform the current international tax rules, including the taxation of the digital economy, by the end of 2020. Unilateral measures can seriously undermine this multilateral approach. Further actions by individual countries should be set aside until the OECD has concluded its work.

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