Taxation of the digital economy: the EU Council decides to contribute to international efforts

The Council of the European Union has agreed on the EU’s contribution to international work on the taxation of profits in the digital economy. The conclusions adopted on December 5, 2017 will also serve as a reference for future work on the subject at EU level, including with a view to the Commission’s legislative proposals scheduled for early 2018.

The Council considers that “the digital economy calls into question the principles recognized in international tax rules. Current tax regulations were designed for the traditional economy, and do not apply to activities that do not require a physical presence in the country where the goods and services are sold”.

In its conclusions, the Council stresses the urgent need for international agreement on the measures to be taken. It calls for close cooperation with the OECD and other international partners. The Council suggests examining the notion of virtual permanent establishment, as well as changes to the rules governing transfer pricing and profit attribution.

This position is in line with the work and recommendations of Syntec Numérique.