2018/0073(CNS) | [ParlTrack]

Proposal for a directive
Recital 24

(24) The ~~second~~ threshold, relating to (total annual taxable revenues in the Union), should limit the application of the tax to cases where there is a significant digital footprint at Union level in relation to the type of revenues covered by DST. It should be set at Union level in order to disregard differences in market sizes which may exist within the Union. This unique threshold is intended to bring more simplicity, legal certainty and fairness. The objective is to capture companies that heavily rely on revenues generated from digital services as described above. This threshold also allows to exclude small enterprises and start-ups for which the compliance burdens of the new tax would be likely to have a disproportionate effect.

Amendment 101 #

Proposal for a directive
Recital 24

(24) Th~~e second~~is threshold (total annual taxable revenues in the Union) should limit the application of the tax to cases where there is a significant digital footprint at Union level in relation to the type of revenues covered by DST. It should be set at Union level in order to disregard differences in market sizes which may exist within the Union.

Amendment 102 #

Proposal for a directive
Recital 24 a (new)

(24a) To protect small enterprises and start-ups compared to larger companies, the DST rate should be set at a different level over the revenues between EUR 25 000 000 and EUR 100 000 000 and over the revenues above EUR 100 000.

Amendment 103 #

Proposal for a directive
Recital 24 b (new)

(24b) To avoid a cliff effect and to protect small companies and start-ups, every taxable person or entity in scope should receive an annual tax allowance of EUR 750 000.

Amendment 104 #

Proposal for a directive
Recital 26

(26) Special rules shcould be set out for entities belonging to a consolidated group for financial accounting purposes. ~~The revenues obtained by an entity from supplies to other entities belonging to the same group for financial accounting purposes should be excluded from the scope of the new tax.~~ For the purposes of determining whether an entity is above the applicable thresholds and thus qualifies as a taxable person, the thresholds should be applied in respect of total consolidated group revenues.

Amendment 105 #

Proposal for a directive
Recital 27

(27) In order to alleviate possible cases of double taxation where the same revenues are subject to the corporate income tax and DST, it is expected that Member States will allow businesses to deduct the DST paid as a cost from the corporate income tax base in their territory, irrespective of whether both taxes are paid in the same Member State or in different ones.deleted

Amendment 106 #

Proposal for a directive
Recital 27

(27) In order to alleviate possible cases of double taxation where the same revenues are subject to the corporate income tax and DST, ~~it is expected that Member States will~~a future Union wide common solution will have to be found on allowing businesses to deduct the DST paid as a cost from the corporate income tax base in their territory, irrespective of whether both taxes are paid in the same Member State or in different ones.

Amendment 107 #

Proposal for a directive
Recital 29

(29) Where the users with respect of a given taxable service are located in different Member States or non-Union jurisdictions, the relevant taxable revenues obtained from that service should be allocated to each Member State in a proportional way on the basis of certain specific allocation keys. Such keys should be set out depending on the nature of each taxable service and the distinctive elements triggering the receipt of revenues for the provider of such a service. Where the allocation key results in an imbalanced apportionment that fails to reflect the real economic activity, a dispute resolution mechanism could remedy such a situation. In light of the foregoing, the Commission should assess the possible establishment of a dispute resolution mechanism in order to ensure the proper resolution of disputes when different Member States are involved.

Amendment 108 #

Proposal for a directive
Recital 32

(32) As regards the exploitation, sale or transmission of data collected about users, the allocation of taxable revenues in a tax period to a Member State should take into account the number of users from whom data exploited, sold or transmitted in that tax period has been generated as a result of such users having used a device in that Member State.

Amendment 109 #

Proposal for a directive
Recital 34

(34) Any processing of personal data carried out in the context of DST should be conducted in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council31 , including that which may be necessary in relation to Internet Protocol (IP) addresses or other means of geolocation, without allowing for identification of users. The Member States' tax authority shall be informed of the method used to determine the location of users . In particular, regard should be given to the need to provide appropriate technical and organisational measures to comply with the rules relating to the lawfulness and security of processing activities, the provision of information and the rights of data subjects. Whenever possible, personal data should be rendered anonymous. _________________ 31 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).

Amendment 110 #

Proposal for a directive
Recital 34

(34) Any processing of personal data carried out in the context of DST should be conducted in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council31 , including that which may be necessary in relation to Internet Protocol (IP) addresses or other means of geolocation. In particular, regard should be given to the need to provide appropriate technical and organisational measures to comply with the rules relating to the lawfulness and security of processing activities, especially with the principles of necessity and proportionality, the provision of information and the rights of data subjects. Whenever possible, personal data should be rendered anonymous. _________________ 31 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).

Amendment 111 #

Proposal for a directive
Recital 35

(35) The taxable revenues should be equal to the total gross revenues obtained by a taxable person, net of value added tax and other similar taxes. Taxable revenues should be recognised as obtained by a taxable person at the time when they become due, regardless of whether they have actually been paid by then. DST should be chargeable in a Member State on the proportion of taxable revenues obtained by a taxable person in a tax period that is treated as obtained in that Member State, and should be calculated by applying the DST rate to that proportion. There should be a single DST rate at Union level in order to avoid distortions in the Single Market. The DST rate should be set at 3% over the revenues between EUR 25 000 000 and EUR 100 000 000 and 5% over the revenues above EUR 100 000, which achieves an appropriate balance between revenues generated by the tax and accounting for the differential DST impact for businesses with different profit margins, as larger digital revenue streams would in most cases enable companies to operate with a higher profit margin.

Amendment 112 #

Miguel VIEGAS

Proposal for a directive
Recital 35

(35) The taxable revenues should be equal to the total gross revenues obtained by a taxable person, net of value added tax and other similar taxes. Taxable revenues should be recognised as obtained by a taxable person at the time when they become due, regardless of whether they have actually been paid by then. DST should be chargeable in a Member State on the proportion of taxable revenues obtained by a taxable person in a tax period that is treated as obtained in that Member State, and should be calculated by applying the DST rate to that proportion. There should be a single DST rate at Union level in order to avoid distortions in the Single Market. The DST rate should be set at 3 %, which achieves an appropriate balance between revenues generated by the tax and accounting for the differential DST impact for businesses with different profit margins.

Amendment 113 #

Proposal for a directive
Recital 35

(35) The taxable revenues should be equal to the total gross revenues obtained by a taxable person, net of value added tax and other similar taxes. Taxable revenues should be recognised as obtained by a taxable person at the time when they become due, regardless of whether they have actually been paid by then. DST should be chargeable in a Member State on the proportion of taxable revenues obtained by a taxable person in a tax period that is treated as obtained in that Member State, and should be calculated by applying the DST rate to that proportion. There should be a single DST rate at Union level in order to avoid distortions in the Single Market. The DST rate should be set at 35%, which achieves a~~n appropriate balance between revenues generated by the tax and~~ level playing field between different businesses in the EU market, accounting for the ~~differenti~~proportional DST impact for digital businesses with ~~different~~higher profit margins. than traditional companies;

Amendment 114 #

Proposal for a directive
Recital 35

(35) The taxable revenues should be equal to the total gross revenues obtained by a taxable person, net of value added tax and other similar taxes. Taxable revenues should be recognised as obtained by a taxable person at the time when they become due, regardless of whether they have actually been paid by then. DST should be chargeable in a Member State on the proportion of taxable revenues obtained by a taxable person in a tax period that is treated as obtained in that Member State, and should be calculated by applying the DST rate to that proportion. There should be a single DST rate at Union level in order to avoid distortions in the Single Market. The DST rate should be set at 35%, which achieves an appropriate balance between revenues generated by the tax and accounting for the differential DST impact for businesses with different profit margins.

Amendment 115 #

Proposal for a directive
Recital 35

(35) The taxable revenues should be equal to the total gross revenues obtained by a taxable person, net of value added tax and other similar taxes. Taxable revenues should be recognised as obtained by a taxable person at the time when they become due, regardless of whether they have actually been paid by then. DST should be chargeable in a Member State on the proportion of taxable revenues obtained by a taxable person in a tax period that is treated as obtained in that Member State, and should be calculated by applying the DST rate to that proportion. There should be a single DST rate at Union level in order to avoid distortions in the Single Market. The DST rate should be set at 35%, which achieves an appropriate balance between revenues generated by the tax and accounting for the differential DST impact for businesses with different profit margins.

Amendment 116 #

Proposal for a directive
Recital 35

(35) The taxable revenues should be equal to the total gross revenues obtained by a taxable person, net of value added tax and other similar taxes. Taxable revenues should be recognised as obtained by a taxable person at the time when they become due, regardless of whether they have actually been paid by then. DST should be chargeable in a Member State on the proportion of taxable revenues obtained by a taxable person in a tax period that is treated as obtained in that Member State, and should be calculated by applying the DST rate to that proportion. There should be a single DST rate at Union level set at 3% in order to avoid distortions in the Single Market~~. The DST rate should be set at 3%, which~~ and to achieves an appropriate balance between revenues generated by the tax and accounting for the differential DST impact for businesses with different profit margins.

Amendment 117 #

Proposal for a directive
Recital 35 a (new)

(35a) A single DST rate at Union level constitutes a first step towards further harmonisation of corporate taxation at Union level. In order to create a level playing field and to eliminate tax competition and the resulting race to the bottom as regards corporate taxation levels, a minimum effective corporate tax rate should also be introduced at Union level in the near future.

Amendment 118 #

Proposal for a directive
Recital 35 a (new)

(35a) The annual tax allowance of EUR 750 000 that every taxable person in scope of this Directive should receive to avoid cliff effects, corresponds with 3% of the lower threshold of EUR 25 000 000, creating a de facto minimum taxation of 3% of every euro earned above EUR 25 000 000.

Amendment 119 #

Proposal for a directive
Recital 37

(37) Member States should be able to lay down accounting, record-keeping or other obligations aimed at ensuring that the DST due is effectively paid, as well as other measures, including penalties and sanctions, to prevent tax evasion, avoidance and abuse.

Amendment 120 #

Proposal for a directive
Recital 37 a (new)

(37a) Total digital service tax paid by a taxable person per Member State should be a part of the system of country-by- country reporting.

Amendment 121 #

Proposal for a directive
Recital 40 a (new)

(40a) The DST is conceived as a temporary measure in order to address the current distortion of competition between digital and non-digital businesses. This situation would however be best addressed by a more comprehensive solution involving a fundamental change in corporate taxation rules at Union level. The best solution to tackle the problem of tax avoidance by digital companies and, more generally, by all companies, resides in the adoption of the Council Directive on a Common Consolidated Corporate Tax Base including the digital permanent establishment as proposed in the legislative resolution of the European Parliament of 15 March 2018 on the proposal for a Council Directive on a Common Consolidated Corporate Tax Base, together with the adoption of the Council Directive laying down rules relating to the corporate taxation of a significant digital presence. Therefore, this Directive should expire as soon as these two latter Directives enter into application.

Amendment 122 #

Proposal for a directive
Recital 40 a (new)

(40a) Three years after .... [the date of entry into force of this Directive], the Commission should produce an evaluation report of the implementation of this Directive and its effects. In particular, the Commission should assess in this report the amount in tax paid due to the DST in each Member State and who bore the economic incidence of the tax. The Commission should present the report both to Parliament and to Council.

Amendment 123 #

Proposal for a directive
Recital 40 a (new)

(40a) Two years after...[the date of entry into force of this Directive], the Commission should make an assessment of the application of this Directive and present a report to the European Parliament and the Council, accompanied, where appropriate, by proposals for its review in accordance with the principles of fair taxation of the digital sector.

Amendment 124 #

Proposal for a directive
Recital 40 b (new)

(40b) DST is a temporary measure which should by no means delay the entrance into force of a permanent solution and it should expire simultaneously after the entrance into force of this permanent solution.

Amendment 125 #

Proposal for a directive
Recital 40 b (new)

(40b) Member States should regularly report to the Commission on the payment of the DST by entities, the functioning of the OSS and the cooperation with other Member States for tax collection and payment.

Amendment 126 #

Proposal for a directive
Recital 40 c (new)

(40c) Three years after...[the date of entry into force of this Directive], the Commission should make an assessment of the application of this Directive and present a report to the European Parliament and the Council, accompanied, if appropriate, by proposals for its review. The report should assess, in particular, the entities covered by the scope of the DST (type of revenues, size, etc.), the amount of tax paid in each Member State, the functioning of the OSS and the re-allocation of DST between Member States, in addition to the potential tax planning practices that were developed by entities to avoid paying the DST.

Amendment 127 #

Alfred SANT

Proposal for a directive
Recital 41

(41) The objectives of this Directive aim at protecting the integrity of the Single Market, ensuring its proper functioning and avoiding distortion of competition. Should Member States consider the interim measure, the scope shall be kept targeted in order to mitigate the impact on investment, innovations and growth in the European Digital Single Market. Since those objectives, by their very nature, cannot be sufficiently achieved by Member States but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives,

Amendment 128 #

Proposal for a directive
Recital 41

(41) The objectives of this Directive aim at protecting the integrity of the Single Market, ensuring its fair and proper functioning and avoiding distortion of competition. Since those objectives, by their very nature, cannot be sufficiently achieved by Member States but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives,

Amendment 129 #

(41a) With the view of increasing the resilience of the Union’s tax system further, the application of the ordinary legislative procedure (Article 114 TFEU) for legislation related to corporate income taxation should be considered,

Amendment 130 #

Proposal for a directive
Article 3 – paragraph 1 – point b a (new)

(ba) the supply of digital content via digital interfaces, such as applications, music, videos, texts or games;

Amendment 131 #

Proposal for a directive
Article 3 – paragraph 1 – point b b (new)

(bb) the online sale of goods or services via digital interfaces;

Amendment 132 #

Proposal for a directive
Article 3 – paragraph 1 – point c

(c) the ~~transmission~~exploitation, the transmission or the sale of data collected about users and generated from users' activities on digital interfaces.

Amendment 133 #

Proposal for a directive
Article 3 – paragraph 1 – point c a (new)

(ca) the making available to users of content on a digital interface such as video, audio or text using a digital interface;

Amendment 134 #

Proposal for a directive
Article 3 – paragraph 1 – point c a (new)

(ca) the making available to users of digital content on digital interfaces;

Amendment 135 #

Proposal for a directive
Article 3 – paragraph 1 – point c b (new)

(cb) the sale of goods or services which are contracted online via digital interfaces.

Amendment 136 #

Proposal for a directive
Article 3 – paragraph 1 – point c b (new)

(cb) the sale of goods and services on digital interfaces.

Amendment 137 #

Proposal for a directive
Article 3 – paragraph 4 – point a

(a) the making available of a digital interface where the sole or main purpose of making the interface available is for the entity making it available to supply ~~digital content to users or to supply~~ communication services to users or to supply payment services to users, as long as no further revenues are generated thanks to the exploitation, transmission or sale of users’ data;

Amendment 138 #

Proposal for a directive
Article 3 – paragraph 4 – point a

Amendment 139 #

Proposal for a directive
Article 3 – paragraph 4 – point a

Amendment 140 #

Proposal for a directive
Article 3 – paragraph 5 a (new)

5a. Taxable revenues resulting from the provision of services listed in paragraph 1 shall be reduced by the part of those revenues generated by an entity in a Member State from users located in that Member State if such revenues are reported by this entity for corporate income tax purposes in that Member State and subject to corporate income tax in that Member State.

Amendment 141 #

Proposal for a directive
Article 3 – paragraph 7

7. Revenues resulting from the provision of a service falling within paragraph 1 by an entity belonging to a consolidated group for financial accounting purposes to another entity in that same group shall not qualify as taxable revenues for the purposes of this Directive.deleted

Amendment 142 #

1. 'Taxable person', with respect to a tax period, shall mean an entity ~~meeting both of the following conditions:~~whose total amount of taxable revenues obtained within the Union during the relevant financial year exceeds EUR 50 000 000.

Amendment 143 #

Proposal for a directive
Article 4 – paragraph 1 – introductory part

1. 'Taxable person', with respect to a tax period, shall mean an entity meeting ~~both of~~ the following conditions:

Amendment 144 #

Proposal for a directive
Article 4 – paragraph 1 – point a

~~(a) the total amount of worldwide revenues reported by the entity for the relevant financial year exceeds EUR 750 000 000;~~deleted

Amendment 145 #

Proposal for a directive
Article 4 – paragraph 1 – point a

~~(a) the total amount of worldwide revenues reported by the entity for the relevant financial year exceeds EUR 750 000 000;~~deleted

Amendment 146 #

Proposal for a directive
Article 4 – paragraph 1 – point b

~~(b) the total amount of taxable revenues obtained by the entity within the Union during the relevant financial year exceeds EUR 50 000 000.~~deleted

Amendment 147 #

Proposal for a directive
Article 4 – paragraph 1 – point b

(b) the total amount of taxable revenues obtained by the entity within the Union during the relevant financial year exceeds EUR 250 000 000.

Amendment 148 #

Proposal for a directive
Article 4 – paragraph 4

4. The rule in Article 5(1) shall apply in determining under paragraph 1~~(b)~~ whether taxable revenues are obtained within the Union.

Amendment 149 #

Proposal for a directive
Article 4 – paragraph 6

6. If the entity referred to in paragraph 1 belongs to a consolidated group for financial accounting purposes, that paragraph shall be applied instead to the ~~worldwide revenues reported by, and~~ taxable revenues obtained within the Union by, the group as a whole.

Amendment 150 #

Proposal for a directive
Article 5 – paragraph 2 – point c a (new)

(ca) in the case of a service falling within Article 3(1)(ca), the digital content in question appears on the user's device at a time when the device is being used in that Member State in that tax period to access a digital interface;

Amendment 151 #

Proposal for a directive
Article 5 – paragraph 2 – point c b (new)

(cb) in the case of goods and services falling within Article 3(1)(cb), the goods and services in question are delivered to users in that Member State in that tax period.

Amendment 152 #

Proposal for a directive
Article 5 – paragraph 3 – point c a (new)

(ca) as regards taxable revenues falling under Article 3(1)(ca), in proportion to the time the content made available to users appears on a user’s device while the device is being used in that Member State to access the digital interface in that tax period;

Amendment 153 #

Proposal for a directive
Article 5 – paragraph 3 – point c b (new)

(cb) as regards taxable revenues falling under Article 3(1)(cb), in proportion to the sales value of the goods and services delivered to a buyer in that Member State in that tax period.

Amendment 154 #

Proposal for a directive
Article 5 – paragraph 3 a (new)

3a. For the purpose of calculating the proportion of an entity’s total taxable revenues that is treated under paragraph 1 as obtained in a Member State under point 3, the users located in the Member States where the entity has met the criteria to exclude revenues from taxable revenues in accordance with Article 3 paragraph 5a shall be excluded from the calculating of the proportion of an entity’s taxable revenues allocated to each Member State.

Amendment 155 #

Proposal for a directive
Article 5 – paragraph 6

6. The data that may be collected from users for the purposes of applying this Directive shall be limited to data indicating the Member State where the users are located, without allowing for the identification of those users. Any processing of personal data carried out for the purposes of applying this Directive shall fully comply with Regulation (EU) 2016/679.

Amendment 156 #

Proposal for a directive
Article 5 – paragraph 6 a (new)

6a. The Commission shall analyse whether the establishment of a dispute resolution mechanism would further increase the effectiveness and efficiency of the settlement of disagreements between Member States. The Commission shall submit a report thereon to the European Parliament and the Council, including, if appropriate, a legislative proposal.

Amendment 157 #

Proposal for a directive
Article 6 – paragraph 1

DST shall be chargeable in a Member State on the proportion of taxable revenues obtained by a taxable person in a tax period that is treated under Article 5 as obtained in that Member State unless the entity is subject to corporate income tax on its total amount of taxable revenues in that Member State. The DST shall become due in that Member State on the next working day following the end of that tax period.

Amendment 158 #

Proposal for a directive
Article 8 – title

Rate and tax allowance

Amendment 159 #

Proposal for a directive
Article 8 – paragraph 1

1. The DST rate shall be 3%: - 3% over the taxable revenues between EUR 25 000 000 and EUR 100 000 000; - 5% over the taxable revenues above EUR 100 000 000.

Amendment 160 #

Miguel VIEGAS

Proposal for a directive
Article 8 – paragraph 1

The DST rate shall be ~~3 %~~determined freely by each Member State in line with the spirit of this directive.

Amendment 161 #

Proposal for a directive
Article 8 – paragraph 1

The DST rate shall be 35%.

Amendment 162 #

Proposal for a directive
Article 8 – paragraph 1

The DST rate shall be 35%.

Amendment 163 #

Proposal for a directive
Article 8 – paragraph 1

The DST rate shall be 35%.

Amendment 164 #

Proposal for a directive
Article 8 – paragraph 1

The DST rate shall be set at 3%.

Amendment 165 #

Proposal for a directive
Article 8 – paragraph 1 a (new)

2. The taxable person shall receive an annual tax allowance EUR 750 000.

Amendment 166 #

Proposal for a directive
Article 13 – paragraph 2

2. However, if the taxable person ceases to be liable to DST in that Member State of identification chosen under Article 10(3)(b), the taxable person shall change its Member State of identification in accordance with the requirements of Article 10, without prejudice to paragraph 2a.

Amendment 167 #

Proposal for a directive
Article 13 – paragraph 2 a (new)

2a. If the taxable person ceases to be liable to DST in the Member State of identification chosen under Article 10(3)(b), the taxable person may decide to keep the Member State of identification initially chosen, given that the taxable person may be liable to DST in that Member State again in the next tax period. If the taxable person is not liable to DST in that Member State for more than two consecutive tax periods, it shall change its Member State of identification in accordance with the requirements of Article 10.

Amendment 168 #

Proposal for a directive
Article 15 – paragraph 2

2. The DST return shall also show, with respect to the tax period, the total amount of ~~worldwide revenues and total amount of~~ taxable revenues within the Union applicable for the purposes of Article 4(1).

Amendment 169 #

2. The amendments referred to in paragraph 1 shall be submitted electronically to the Member State of identification within t~~hree~~wo years of the date on which the initial return was required to be submitted. Amendments after such period shall be governed by the rules and procedures applicable in each Member State respectively where DST is due.

Amendment 170 #

Proposal for a directive
Article 18 – paragraph 3

3. Member States may adopt measures, including penalties and sanctions, to prevent tax evasion, avoidance and abuse with respect to DST.

Amendment 171 #

Proposal for a directive
Article 18 – paragraph 3

3. Member States ~~may~~shall adopt measures to prevent tax evasion, avoidance and abuse with respect to DST.

Amendment 172 #

Proposal for a directive
Article 18 – paragraph 5 a (new)

5a. After adoption of this Directive, the Commission shall make a legislative proposal to include in Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches, providing for the total amount of digital service tax paid by a taxable person to the different Member States to be added to the list of obligatory country-by-country reporting standards.

Amendment 173 #

Proposal for a directive
Chapter 4 – title

ADMINISTRATIVE COOPERATION AND MANDATORY EXCHANGE OF INFORMATION

Amendment 174 #

Proposal for a directive
Article -20 (new)

Article -20 Automatic and mandatory exchange of information In order for tax authorities to assess tax due properly and to ensure the proper and uniform implementation of this Directive, the exchange of information on tax matters shall be automatic and mandatory, as laid down by Council directive 2011/16/EU. Member States shall allocate adequate staff, expertise and budget resources to their national tax administrations as well as resources for the training of tax administration staff focusing on cross-border tax cooperation and on the automatic exchange of information in order to ensure full implementation of this Directive.

Amendment 175 #

Proposal for a directive
Article 23 a (new)

Article 23a Evaluation Report Three years after.... [the date of entry into force of this Directive], the Commission shall produce an evaluation report of the implementation of this Directive and its effects. In particular, the Commission shall assess in this report the amount in tax paid due to the DST in each Member State and who bore the economic incidence of the tax. The Commission shall present the report to both Parliament and Council.

Amendment 176 #

Proposal for a directive
Article 24 a (new)

Article 24a Review clause (Three years after...[the date of entry into force of this Directive], the Commission shall make an assessment of the application of this Directive and present a report to the European Parliament and the Council, accompanied, where appropriate, by proposals for its review in accordance with the principles of fair taxation of the digital sector. In its report the Commission should assess, notably, - the impact of DST on Member States’ revenues; - the impact on the internal market as a whole, with particular regard to possible distortion of competition between companies subject to the new rules laid down in this Directive; - the need to increase the scope to cover more digital activities and the rate of the DST; - the potential tax planning practices that were applied by entities to avoid paying the DST.

Amendment 177 #

Proposal for a directive
Article 24 a (new)

Article 24a Review Clause Two years after...[the date of entry into force of this Directive], the Commission should make an assessment of the application of this Directive and present a report to the European Parliament and the Council, accompanied, where appropriate, by proposals for its review in accordance with the principles of fair taxation of the digital sector. Furthermore the Commission should assess, notably, the impact on the entities which were covered by the scope of the DST, the amount of tax paid in each Member State, the type of digital activities within the scope of this Directive and the kinds of taxable revenue, in addition to the rate applied and the potential tax planning practices that were applied by entities to avoid paying the DST.

Amendment 178 #

Proposal for a directive
Article 24 a (new)

Article 24a Sunset clause This Directive shall cease to apply as soon as the two following Council Directives enter into application: (a) the Council Directive laying down rules relating to the corporate taxation of a significant digital presence; and (b) the Council Directive on a Common Consolidated Corporate Tax Base including the digital permanent establishment as proposed in the legislative resolution of the European Parliament of 15 March 2018 on the proposal for a Council directive on a Common Consolidated Corporate Tax Base.

Amendment 179 #

Proposal for a directive
Article 24 b (new)

Article 24b Reporting obligations Member States shall report every year to the Commission relevant figures and information on the payment of the DST by entities, the functioning of the OSS and the cooperation with other Member States for tax collection and payment.

Amendment 180 #

Proposal for a directive
Article 24 c (new)

Article 24c Review Three years after...[the date of entry into force of this Directive], the Commission shall conduct an assessment of the application of this Directive and present a report to the European Parliament and the Council, accompanied, if appropriate, by proposals for its review. The report shall assess, in particular, the entities covered by the scope of this Directive, the amount of tax paid in each Member State and the functioning of the OSS.

Amendment 181 #

Markus FERBER

Proposal for a directive
Article 25 a (new)

Article 25a Sunset Clause The provisions laid down in this directive shall automatically cease to apply in the following cases: - if a permanent and comprehensive solution1a has entered into force, or - if no permanent and comprehensive solution is in place, automatically by 31 December 2025. In case an agreement on a permanent and comprehensive solution has been reached, this regulation shall cease to apply on the day the permanent and comprehensive solution becomes applicable. _________________ 1a Council Directive laying down rules relating to the corporate taxation of a significant digital presence (2018/0072 (CNS)) or any other measure of similar nature or effect.

Amendment 182 #

Proposal for a directive
Article 26 a (new)

Article 26a Sunset clause This Directive shall expire on 1 January 2025. At least 24 months before 1 January 2025, the Commission shall submit a report to the European Parliament and the Council assessing the progress made on developing and applying the revisions to the international corporate tax system at OECD level to adapt it to the challenges arising from digitalisation and on the application of this Directive and shall, if appropriate, present a proposal to amend this Directive.

Amendment 183 #

Proposal for a directive
Article 26 a (new)

Article 26a Sunset clause The provisions of this Directive shall be applicable until the Proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence (COM(2018) 147 final) or the Proposals for a Council Directive on a Common Corporate Tax Base and on a Common Consolidated Corporate Tax Base, including the digital permanent establishment, come into effect or until [31 December 2021], whichever is earliest.

Amendment 30 #

Miguel VIEGAS

Draft legislative resolution
Paragraph 1

1. ~~Approve~~Rejects the Commission proposal ~~as amended~~;

Amendment 31 #

Draft legislative resolution
Paragraph 1

1. ~~Approve~~Rejects the Commission proposal ~~as amended~~;

Amendment 32 #

Draft legislative resolution
Paragraph 1

1. ~~Approve~~Rejects the Commission proposal as amended;

Amendment 33 #

Draft legislative resolution
Paragraph 3 a (new)

3a. Recalls that the EU's Regulatory Scrutiny Board has sharply criticised that the Commission’s proposal fails to include a tax-economic impact assessment: The Commission’s proposal “does not show the urgency for the EU to act, before global progress is achieved at OECD/G20 level”. The Commission fails to take into account tax incidence, i.e. who will ultimately bear the financial burden of the tax, i.e. workers, consumers, company owners. It does not consider the impact on downstream industries, industry output, offline sales, SMEs and microbusinesses. The Commission’s rudimentary assessment also neglects the impact on competition in the EU, particularly competition between large and small firms as well as the question of whether the digital services tax will not have a detrimental effect on innovation, economic renewal and convergence in the EU. Similarly, the impact on private sector investment in the EU has not been addressed by the Commission.

Amendment 34 #

Draft legislative resolution
Paragraph 3 b (new)

3b. Recalls that the Commission’s claim that traditional companies pay an average of 23% of taxes while digital companies only around 10% of taxes is not based on real observed data, but rather on a ZEW-simulation from 2016 which considers a “hypothetical investment project” (ZEW 2016; p. 9). Notably, the lead author of the study has distanced himself from the Commission’s proposal. Similarly, a recent study by Copenhagen Economics (p. 6) outlines that, for example, “[i]n Germany, a digital company faces a higher effective tax rate of 25% against 21% for a traditional company. In the absence of accelerated R&D depreciation allowances it would have been 30%.” Several studies point to the fact that the challenges in international taxation, e.g. profit shifting and tax avoidance practices, which indeed can distort competition, prevail for all types of companies and business models, irrespective of whether they are digital, less digital or non-digital.

Amendment 35 #

Draft legislative resolution
Paragraph 3 c (new)

3c. Recalls that even if the underlying justification for the DST could be substantiated by real-world observations, the proposal would still be fundamentally problematic: 1) the contribution that users of digital interfaces make to value creation can hardly be determined on the basis of objective criteria; 2) the value of a service is determined only by the coincidence of supply and demand; 3) producers of traditional goods, particularly SMEs, can also sell their products in other countries without being substantially physically present. Therefore, the principle that the place of taxation must correspond to the place of value added justifies any arbitrary tax intervention and is likely to evoke significant retaliatory measures by foreign governments. Retaliatory measures, e.g. import tariffs and destination-based taxes, will impact on EU exporters’ competitiveness in export markets and negatively impact on EU Member States’ public budgets.

Amendment 36 #

Draft legislative resolution
Paragraph 3 d (new)

3d. Recalls that the assumption underlying the Commission proposal is that companies in the digital space do not pay their share of taxes, or they want to see companies that engage in aggressive tax practices to be taxed appropriately. The introduction of a digital tax will not prevent any company from paying their taxes on profits where it is most lucrative for them. Introducing the DST does not at all close gaps in the present tax regime, nor does it shut down tax havens. At the same time, a DST could lead to new tax avoidance strategies, whereby companies above the minimum threshold could separate or downsize their components. Accordingly, the digital services tax would not at all level the playing field for digital, less digital or non-digital corporations.

Amendment 37 #

Draft legislative resolution
Paragraph 3 e (new)

3e. Recalls that the OECD’s digital economy group has concluded after a two-year period of studying the topic that it was impossible to ring-fence the “digital economy” considering that digitalisation has permeated nearly all industries and sectors: “[b]ecause the digital economy is increasingly becoming the economy itself, it would be difficult, if not impossible, to ring-fence the digital economy from the rest of the economy for tax purposes.” (OECD 2015; p.11) Ring-fencing would require strong political value judgements about the legitimacy of certain business models and might open the door for increased state interventionism in Europe’s economies. It would also stand in conflict with the Treaty of Lisbon, stating that the Union “shall promote scientific and technological advance.” (Article3).

Amendment 38 #

Draft legislative resolution
Paragraph 3 f (new)

3f. Recalls that the Commission assumes that the digitised companies concerned will largely cover the costs. This is not supported by empirical research on the price effects of comparable tax increases – for both taxes on corporate profit and taxes on corporate sales. As concerns the Commission’s proposal to tax corporate revenues, companies that make losses or operate on low margins will have no choice but to pass on the costs.

Amendment 39 #

Draft legislative resolution
Paragraph 3 g (new)

3g. Recalls that work is currently ongoing at the OECD to find a solution to taxing the digital economy that is in line with OECD principles and international law and can be agreed to by the G20. Supports a global solution awaiting the OECD proposal. Requests that the Commission presents a proposal to Parliament based on the OECD's proposal for a global solution.

Amendment 40 #

Proposal for a directive
Recital 1

(1) The global economy is rapidly becoming digital and, as a result, new ways of doing business have emerged. Digital companies are characterised by the fact that their operations are strongly linked to the internet. In particular, digital business models rely to a large extent on the ability to conduct activities remotely and with limited or no physical ~~presence~~or taxable presence in a given country, on the contribution of end-users to value creation, and on the importance of intangible assets.

Amendment 41 #

Proposal for a directive
Recital 2

(2) The current corporate taxation rules were mainly developed during the 20th century for traditional businesses. They are based on the idea that taxation should take place where value is created. However, the application of the current rules to the digital economy has led to a misalignment between the place where profits are taxed and the place where value is created, notably in the case of business models heavily reliant on user participation. Digitalisation has changed the role of users, allowing them to become increasingly involved in the value creation process. It has therefore become evident that the current corporate tax rules for taxing the profits of the digital economy are ~~inadequate and~~not taking this new factor into account and urgently need to be reviewed.

Amendment 42 #

Proposal for a directive
Recital 2 a (new)

(2a) The objective is to close the gap between taxation of digital revenues and traditional revenues. Currently, on average, digital businesses face an effective tax rate of only 9.5%, compared to 23.2% for traditional business models1a. A taxation system must be fair and beneficial to society as a whole. There should be a level playing field for all companies operating in the Single Market. _________________ 1a Source: Computations from the Impact Assessment of the European Commission, based on ZEW (2016, 2017) and ZEW et al.(2017).

Amendment 43 #

Proposal for a directive
Recital 2 a (new)

(2a) In the digital age, now that data has become the new economic resource, as opposed to labour and traditional resources in the past, a new approach needs to be developed in order to have a fair and sustainable system of digital taxation.

Amendment 44 #

Proposal for a directive
Recital 2 a (new)

(2a) EU should focus on creating a more attractive business environment in order to achieve a well-functioning Digital Single Market while waiting for a global solution on taxing the digital economy;

Amendment 45 #

Proposal for a directive
Recital 2 b (new)

(2b) The underlying assumption of “under taxation” of digital companies can be questioned. An impact assessment from Copenhagen Economics (The proposed EU digital services tax: effects on welfare, growth and revenue) notes that a major factor to digital companies lower effective tax rate is individual countries beneficial research and development regimes as well as fundamental difference in business models;

Amendment 46 #

Alain LAMASSOURE

Proposal for a directive
Recital 3

(3) That review constitutes an important element of the Digital Single Market24 , given that the Digital Single Market needs a modern and stable tax framework for the digital transformations affecting our economy to stimulate innovation, tackle market fragmentation and allow all players to tap into the new market dynamics under fair and balanced conditions. Such evolutions call for a broad adaptation of the current corporate tax framework to properly integrate all such digital transformations, which goes beyond the creation of a Digital Services Tax. The ad hoc measures contained in this Directive should therefore not delay works on the taxation of a significant digital presence and on the inclusion of such taxation within a Common Consolidated Corporate Tax Base. _________________ 24 Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee and the Committee of the Regions 'A Digital Single Market Strategy for Europe' (COM(2015) 192 final of 6.5.2015).

Amendment 47 #

Proposal for a directive
Recital 3

(3) That review constitutes an important element of the Digital Single Market24 , given that the Digital Single Market needs a modern and stable tax framework for the digitalised economy to stimulate innovation, tackle market fragmentation and allow all players to tap into the new market dynamics under fair and balanced conditions. _________________ 24 Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee and the Committee of the Regions 'A Digital Single Market Strategy for Europe' (COM(2015) 192 final of 6.5.2015).

Amendment 48 #

Proposal for a directive
Recital 3 a (new)

(3a) Digitalisation affects the whole economy with many firms using multi- channel models; thus, instead of creating special regimes for digital businesses, international tax rules should be reformed, based on a principle of neutrality between different business models, both digital and non-digital, and regardless of the extent or form of digitalisation, including multi-channel models, recognising the economic reality businesses operate in today.

Amendment 49 #

Proposal for a directive
Recital 3 b (new)

(3b) In particular, this means reforming the definition of a permanent establishment to be more in line with the concept of a permanent establishment as defined in the 2010 UN model tax convention.

Amendment 50 #

Proposal for a directive
Recital 4

(4) In its Communication "A Fair and Efficient Tax System in the European Union for the Digital Single Market"25 adopted on 21 September 2017, the Commission identified the challenges that the digital economy posed for existing tax rules, and committed to analyse the policy options available. The ECOFIN Council conclusions of 5 December 201726 invited the Commission to adopt proposals responding to the challenges of taxing profits in the digital economy, while taking note also of the interest expressed by many Member States for temporary measures aimed at revenues resulting from digital activities in the Union that would remain outside the scope of double tax conventions. However this should not prevent unilateral action from being taken by Member States. _________________ 25 Communication from the Commission to the European Parliament and the Council 'A Fair and Efficient Tax System in the European Union for the Digital Single Market' (COM(2017) 547 final of 21.9.2017). 26 Responding to the challenges of taxation of profits of the digital economy – Council conclusions (5 December 2017) (FISC 346 ECOFIN 1092).

Amendment 51 #

Alfred SANT

Proposal for a directive
Recital 5

(5) Given the problem of taxing the digital economy is of a global nature, the ideal approach would be to find a multilateral, international solution to it. The Commission is actively engaged in the international debate for that reason. Work at the OECD is currently ongoing. However, progress at international level is challenging. Hence, action is being taken to adapt the corporate tax rules at Union level27 and to encourage agreements to be reached with non-Union jurisdictions28 , so that the corporate tax framework can be made to fit the new digital business models. There is a common interest in maintaining a coherent yet relevant set of international rules. Therefore, coherence with the BEPS Inclusive Framework should be ensured, given the absence of consensus on the merits for interim measures. _________________ 27 Proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence (COM(2018) 147 final). 28 Commission Recommendation relating to the corporate taxation of a significant digital presence (C(2018) 1650 final).

Amendment 52 #

Proposal for a directive
Recital 5

(5) Given the problem of taxing the digital economy is of a global nature, the ideal approach would be to find a multilateral, international solution to it. The Commission is actively engaged in the international debate for that reason. Work at the OECD, the International Monetary Fund (IMF), the United Nations (UN) and the World Bank Group (WBG), which form the platform for Collaboration on Tax is currently ongoing. However, progress at international level is challenging. Hence, action is being taken to adapt the corporate tax rules at Union level27 and to encourage agreements to be reached with non-Union jurisdictions28 , so that the corporate tax framework can be made to fit the new digital business models. _________________ 27 Proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence (COM(2018) 147 final). 28 Commission Recommendation relating to the corporate taxation of a significant digital presence (C(2018) 1650 final).

Amendment 53 #

Proposal for a directive
Recital 5 a (new)

(5a) Notwithstanding the difficulties of reaching a global agreement, such an agreement should still be pursued with great effort. Progress on the OECD level has been slow and results have been disappointing. As called for in the European Parliament’s inquiry committee into money laundering, tax avoidance and tax evasion (PANA) and in its special committee on tax rulings and other measures similar in nature or effect (TAXE2), an empowered UN tax body should thus be installed to serve as the forum for debates and discussions on said agreement and other matters related to the international tax system.

Amendment 54 #

Proposal for a directive
Recital 5 a (new)

(5a) The tax challenges stemming from the digitalization of the economy is a global issue requiring a global solution;

Amendment 55 #

Proposal for a directive
Recital 5 b (new)

(5b) The correct forum for tax challenges stemming from the digitalization is within the OECD;

Amendment 56 #

Proposal for a directive
Recital 5 c (new)

(5c) This proposal deviates from well- established principles of international taxation;

Amendment 57 #

Proposal for a directive
Recital 5 d (new)

(5d) It is unlikely that the OECD would adopt the same permanent establishment definition as the EU;

Amendment 58 #

Proposal for a directive
Recital 5 e (new)

(5e) There is a risk that the EU system of a permanent establishment definition will part way from the OECD system and result in different definitions;

Amendment 59 #

Proposal for a directive
Recital 5 f (new)

(5f) The EU system of a permanent establishment definition will develop through judgements from the ECJ while the definition applied in the rest of the world will instead develop through international consensus expressed by the OECD;

Amendment 60 #

Proposal for a directive
Recital 5 g (new)

(5g) The permanent establishment definition has developed through a dynamic procedure within the OECD. By deviating from this procedure, the complexity would multiply;

Amendment 61 #

Markus FERBER

Proposal for a directive
Recital 6

(6) Pending such action, which may take time to adopt and implement, Member States face pressure to act on this issue, given the risk that their corporate tax bases are being significantly eroded over time. Uncoordinated measures taken by Member States individually can fragment the Single Market and distort competition, hampering the development of new digital solutions and the Union's competitiveness as a whole. This is why it is necessary to adopt a harmonised approach on an interim solution that will tackle this issue in a targeted way until a comprehensive solution is in place. In light of the fact, that the interim solution constitutes a severe deviation from the usual system of corporate taxation, the interim solution shall be temporarily restricted in order to avoid that it becomes permanent by accident. Therefore a sunset clause is introduced that would result in the provisions of this Directive automatically ceasing to apply by 31 December 2025 if no permanent and comprehensive solution has been found.

Amendment 62 #

Alain LAMASSOURE

Proposal for a directive
Recital 6

(6) Pending such action, which may take time to adopt and implement, Member States face pressure to act on this issue, given the risk that their corporate tax bases are being significantly eroded over time. Uncoordinated measures taken by Member States individually can fragment the Single Market and distort competition, hampering the development of new digital solutions and the Union's competitiveness as a whole. This is why it is necessary to adopt a harmonised approach on an interim solution that will tackle this issue in a targeted way until a comprehensive solution is in place. However, considering the limited revenues generated by the DST and the potentially adverse effects of such a taxation on revenues, it should be recalled that the aforementioned comprehensive solution should be setup swiftly.

Amendment 63 #

Proposal for a directive
Recital 6

(6) Pending such action, which may take time to adopt and implement, Member States face pressure to act on this issue, given the risk that their corporate tax bases are being significantly eroded over time. Uncoordinated measures taken by Member States individually can fragment the Single Market and distort competition, hampering the development of new digital solutions and the Union's competitiveness as a whole. This is why it is necessary to adopt a harmonised approach on an interim solution ~~that will tackl~~, preventing a further deterioration of the current situation of unfair taxation of digital economic activities. The interim solution should solve this issue in a targeted way until a comprehensive solution, preferably on international level, is in place.

Amendment 64 #

Proposal for a directive
Recital 6 a (new)

(6a) If this proposal for an interim solution does not result in an agreement and therefore fails to eliminate the risks of fragmentation of the Single Market and of distortion of competition, the European Commission should issue a new proposal based on Article 116 of the Treaty on the Functioning of the European Union, whereby the European Parliament and the Council act in accordance with the ordinary legislative procedure to issue the necessary directives. This is essential to come to an agreement without delay in order to tackle this issue and to avoid the multiplication of unilateral national digital taxes by Member States. If necessary, a change of legal basis should therefore be envisaged.

Amendment 65 #

Proposal for a directive
Recital 6 a (new)

(6a) The interim solution should therefore cease to exist as soon as an agreement on international level has been found and in any case no later than 1 January 2025. To avoid distortion of the Single Market, Member States should after 1 January 2025 (or after an agreement on international level has been found) terminate all laws which were necessary to comply with this Directive and avoid gold plating of the agreement found on international level.

Amendment 66 #

Proposal for a directive
Recital 7

(7) That interim solution should establish the common system of a digital services tax ('DST') on revenues resulting from the supply of ~~certain~~ digital services by certain entities, whether or not these are freely accessible or paid digital services and online content. It should be an easy- to- implement measure targeting the revenues stemming from the supply of digital services where users contribute significantly to the process of value creation. Such factor (user value creation) also underpins the action with respect to corporate tax rules, as described in recital (5). On digital interfaces, it is very difficult to distinguish between a customer and a user, since both contribute significantly to the process of value creation in most cases. The term ‘user’ in this Directive is therefore referring to both consumers and users of digital services and online content.

Amendment 67 #

Proposal for a directive
Recital 7

(7) That interim solution should establish the common system of a digital services tax ('DST') on revenues resulting from the supply of certain digital services by certain entities. It should be an easy-to- implement measure targeting the revenues stemming from the supply of digital services, the supply of online content, such as applications, music, videos, text and games, and the online sale of goods and services via digital interfaces where users contribute significantly to the process of value creation. Such factor (user value creation) also underpins the action with respect to corporate tax rules, as described in recital (5).

Amendment 68 #

Proposal for a directive
Recital 7

(7) That interim solution should establish the common system of a digital services tax ('DST') on revenues resulting from the supply of certain digital services by certain entities. It should be an easy-to- implement measure targeting the revenues stemming from the supply of digital services, online content and the sale of goods or services which are sold via a digital interface where users contribute significantly to the process of value creation. Such factor ~~(user value creation)~~s also underpins the action with respect to corporate tax rules, as described in recital (5).

Amendment 69 #

Proposal for a directive
Recital 7 a (new)

(7a) With the proposed Digital Services Tax, there is a great risk of creating unfair taxation with unforeseeable consequences;

Amendment 70 #

Proposal for a directive
Recital 7 b (new)

(7b) This proposal explicitly changes the allocation of tax revenues between countries. The proposals by the Commission constitute a fundamental change to the international corporate tax system;

Amendment 71 #

Proposal for a directive
Recital 7 c (new)

(7 c) The proposal regarding a Significant Digital Presence would inevitably result in two parallel systems, which would be extremely costly and associated with great uncertainty for the taxpayers;

Amendment 72 #

Proposal for a directive
Recital 7 d (new)

(7d) The proposed Digital Services Tax is a tax on turnover instead of on profits. This deviates from fundamental principles of international taxation;

Amendment 73 #

Proposal for a directive
Recital 9

(9) DST should be applied to revenues resulting from the provision of ~~certain~~ digital services ~~only. The digital services should be ones that are~~ largely reliant on user value creation where the difference between the place where the profits are taxed and the place where the users are established is typically greatest. ~~It is the revenues obtained from the processing of user input that should be taxed, not the user participation in itself.~~

Amendment 74 #

Proposal for a directive
Recital 9

(9) DST should be applied to revenues resulting from the provision of ~~certain~~ digital services ~~only. The digital services should be ones~~ that are largely reliant on user value creation ~~where~~and on their ability to deliver services with no or a very limited physical presence. In such cases, the difference between the place where the profits are taxed and the place where the users are established is typically greatest allowing for decoupling market presence and physical presence in many sectors of the economy. It is the revenues obtained from the processing of user input that should be taxed, not the user participation in itself.

Amendment 75 #

Proposal for a directive
Recital 10

(10) In particular, taxable revenues should be those resulting from the provision of the following digital services: (i) the placing on a digital interface of advertising targeted at users of that interface; (ii) the making available of multi-sided digital interfaces which allow users to find other users and to interact with them, and which may also facilitate the provision of underlying supplies of goods or services directly between users (sometimes referred to as "intermediation" services); ~~and~~ (iii) the exploitation, transmission and sale of data collected about users and generated from such users' activities on digital interfaces; (iv) the supply of online content such as video or audio via digital interfaces; and (v) the sale of goods and services on digital interfaces. If no revenues are obtained from the supply of such content, goods and services, there should be no DST liability. Other revenues obtained by the entity providing such services but not directly stemming from such supplies should also fall outside the scope of the tax.

Amendment 76 #

Proposal for a directive
Recital 10

(10) In particular, taxable revenues should be those resulting from the provision of the following ~~services~~: (i) the placing on a digital interface of advertising targeted at users of that interface; (ii) the making available of multi-sided digital interfaces which allow users to find other users and to interact with them, and which may also facilitate the provision of underlying supplies of goods or services directly between users (sometimes referred to as "intermediation" services); ~~and~~ (iii) the transmission of data collected about users and generated from such users' activities on digital interfaces (iv) the supply of digital content such as videos, audio or text; and (v) the sale of goods or services sold via a digital interface. If no revenues are obtained from the supply of listed activities . If no revenues are obtained from the supply of such services, there should be no DST liability. Other revenues obtained by the entity providing such services but not directly stemming from such supplies should also fall outside the scope of the tax.

Amendment 77 #

Proposal for a directive
Recital 10

(10) In particular, taxable revenues should be those resulting from the provision of the following services: (i) the placing on a digital interface of advertising targeted at users of that interface; (ii) the making available of multi-sided digital interfaces which allow users to find other users and to interact with them, and which may also facilitate the provision of underlying supplies of goods or services directly between users (sometimes referred to as "intermediation" services); and (iii) the transmission of data collected about users and generated from such users' activities on digital interfaces; (iv) the supply of digital content such as applications, music, videos, texts or games; (v) the online sale of goods or services via digital interfaces. If no revenues are obtained from the supply of such goods or services, there should be no DST liability. Other revenues obtained by the entity providing such services but not directly stemming from such supplies should also fall outside the scope of the tax.

Amendment 78 #

Alfred SANT

Proposal for a directive
Recital 11

(11) Services consisting in the placing on a digital interface of a client's advertising targeted at users of that interface should not be defined by reference to who owns the digital interface through which the advertising appears on a user's device, but rather by reference to the entity responsible for enabling the advertising to appear on that interface. This is because the value for a business placing a client's advertising on a digital interface lies with user traffic and the user data which is typically taken into account for the purposes of the placement, regardless of whether the interface belongs to the business itself or to a third party who is renting out the digital space where the advertisement will appear. However, it should be clarified that in cases where the supplier of the advertising service and the owner of the digital interface are different entities, the latter should not be considered to have provided a taxable service for DST purposes. This is in order to avoid possible cascading effects and double taxation. Moreover, the DST as proposed will require companies to keep significant volume of user data to be able to commute tax in each Member State, an approach that could not be in compliance with data protection safeguards.

Amendment 79 #

Proposal for a directive
Recital 12

(12) Services provided by multi-sided digital interfaces should be defined by reference to their capacity to enable users to find other users and to interact with them. The differential aspect of multi-sided digital interfaces is that they allow a user interaction which could not take place without the interface matching users with each other (in other words, the interface allows users to get in touch with other users). Some services typically referred to as communication or payment services, such as instant messaging services, e-mail services or e-payment services, may also be seen as facilitating the interaction between users through a digital interface, but users cannot usually get in touch with each other unless they have already established contact by other means. The revenues resulting from the supply of communication or payment services should therefore remain outside the scope of the tax because such suppliers do not operate as a marketplace, but rather produce support software or other information technology instruments allowing customers to reach out to other persons with whom they already have a relationship in most cases. However, if these services, such as e-mail services, are creating further value thanks to the exploitation, transmission or sale of users’ data, these revenues should fall within the scope of DST.

Amendment 80 #

Proposal for a directive
Recital 13

(13) For cases involving multi-sided digital interfaces that facilitate an underlying supply of goods or services directly between users of the interface, the underlying transactions and the revenues obtained by users from those transactions should remain ~~outside~~within the scope of the tax. The revenues resulting from retail activities consisting in the sale of goods or services which are contracted online via the website of the supplier of such goods or services, and where the supplier does not act as an intermediary, should also be outside the scope of DST because the value creation for the retailer lies with the goods or services provided and the digital interface is only used as a means of communication. Whether a supplier is selling goods or services online on his own account or providing intermediation services would be determined by taking into account the legal and economic substance of a transaction, as reflected in the arrangements between the relevant parties. For instance, a supplier of a digital interface where third-party goods are made available could be said to provide an intermediation service (in other words, the making available of a multi-sided digital interface) where no significant inventory risks are assumed, or where it is the third party effectively setting the price of such goodswithin the scope of DST.

Amendment 81 #

Proposal for a directive
Recital 13

(13) ~~For cases involving~~The revenues obtained from online transactions made through multi-sided digital interfaces that facilitate an underlying supply of goods or services directly between users of the interface~~, the underlying transactions and the revenues obtained by users from those transactions should remain outside~~ should fall within the scope of the ~~tax~~DST. The revenues resulting from retail activities consisting in the sale of goods or services which are contracted online via the website of the supplier of such goods or services, and where the supplier does not act as an intermediary, should also ~~be outside~~fall within the scope of DST because the value creation for the retailer lies with the goods or services provided and the digital interface is only used as a means of communication. Whether a supplier is selling goods or services online on his own account or providing intermediation services would be determined by taking into account the legal and economic substance of a transaction, as reflected in the arrangements between the relevant parties. For instance, a supplier of a digital interface where third-party goods are made available could be said to provide an intermediation service (in other words, the making available of a multi-sided digital interface) where no significant inventory risks are assumed, or where it is the third party effectively setting the price of such goodsprocessing and exploitation of data on such transactions creates further value and because the absence of physical presence may create opportunities for tax avoidance.

Amendment 82 #

Proposal for a directive
Recital 13

(13) For cases involving multi-sided digital interfaces that facilitate an underlying supply of goods or services directly between users of the interface, the underlying transactions and the revenues obtained by users from those transactions should remain outside the scope of the tax. The revenues resulting from retail activities consisting in the sale of goods or services which are contracted online via the website of the supplier of such goods or services, and where the supplier does not act as an intermediary, should also be outside the scope of DST because the value creation for the retailer lies with the goods or services provided and the digital interface is only used as a means of communication. Whether a supplier is selling goods or services online on his own account or providing intermediation services would be determined by taking into account the legal and economic substance of a transaction, as reflected in the arrangements between the relevant parties. For instance, a supplier of a digital interface where third-party goods are made available could be said to provide an intermediation service ( remain largely untaxed due to the lack of a physical presence in the different Member States and offer significant competitive advantages to digital retailers operating online with respect to traditional businesses based on a Member State. In order to achieve a level playing field among different companies in othe~~r words, the making available of a multi-sided digital interface) where no significant inventory risks are assumed, or where it is the third party effectively sett~~ EU market, these revenues should therefore be included ing the ~~pric~~scope of ~~such goods~~DST.

Amendment 83 #

Proposal for a directive
Recital 14

(14) Services consisting in the supply of digital content by an entity through a digital interface should be exincluded ~~from~~in the scope of the tax, regardless of whether the digital content is owned by that entity or that entity has acquired the rights to distribute it. Even if some sort of interaction between the recipients of such digital content may be allowed and therefore the supplier of such services could be seen as making available a multi-sided digital interface, it is less clear that the user plays a central role in the creation of value for the company supplying the digital content. Instead, the focus from the perspective of value creation is on the digital content itself which is supplied by the entity. Therefore the revenues obtained from such supplies should fall outside the scope of the tax.

Amendment 84 #

Proposal for a directive
Recital 14

Amendment 85 #

Proposal for a directive
Recital 14

(14) Services consisting in the supply of digital content by an entity through a digital interface should initially be excluded from the scope of the tax, regardless of whether the digital content is owned by that entity or that entity has acquired the rights to distribute it. Even if some sort of interaction between the recipients of such digital content may be allowed and therefore the supplier of such services could be seen as making available a multi- sided digital interface, it is less clear that the user plays a central role in the creation of value for the company supplying the digital content. Instead, the focus from the perspective of value creation is on the digital content itself which is supplied by the entity. Therefore the revenues obtained from such supplies should ~~fall outside the scope of the tax~~be evaluated by the Commission within two years of the entry into force of this Directive in order to asses if they should be covered by the DST.

Amendment 86 #

Proposal for a directive
Recital 14

(14) Services consisting in the supply of digital content by an entity through a digital interface should be exincluded ~~from~~in the scope of the tax, regardless of whether the digital content is owned by that entity or that entity has acquired the rights to distribute it. EGiven that there ifs some sort of interaction between the recipients of such digital content ~~may be allowed and therefore the supplier of such services could be seen as making available a multi-sided digital interface~~and the supplier of such services, it is ~~less~~ clear that the user ~~plays a~~still significantly ceontr~~al role in~~ibute to the creation of further value for the company supplying the digital content~~. Instead, the focus from the perspective of value creation is on the digital content itself which is supplied by the entity~~, in particular thanks to the exploitation and processing of users’ data. Therefore, the revenues obtained from such supplies should fall ~~outside~~within the scope of the tax, also because the absence of physical presence may create opportunities for tax avoidance.

Amendment 87 #

Proposal for a directive
Recital 15

(15) Digital content should be defined to mean data supplied in digital form, such as computer programmes, applications, games, music, videos or texts, irrespective of whether they are accessed through downloading or streaming, and other than the data represented by a digital interface itself. This is to capture the different forms which digital content can take when acquired by a user~~, which does not alter the fact that the sole or main purpose from the user's perspective is the acquisition of the digital content~~.

Amendment 88 #

Proposal for a directive
Recital 15 a (new)

(15a) It can be questioned whether a jurisdiction has a right to tax income if there is no physical footprint meaning that the infrastructure of the relevant jurisdiction is not utilized;

Amendment 89 #

Proposal for a directive
Recital 15 b (new)

(15b) Digital companies tend to invest less in buildings and machinery than regular companies do;

Amendment 90 #

Proposal for a directive
Recital 16

(16) The service described in recital (14) should be distinguished from a service consisting in the making available of a multi-sided digital interface through which users can upload and share digital content with other users, or the making available of an interface that facilitates an underlying supply of digital content directly between users. These latter services constitute a service of intermediation and should therefore fall within the scope of DST, regardless of the nature of the underlying transaction.deleted

Amendment 91 #

Proposal for a directive
Recital 16

(16) The service described in recital (14) shcould be distinguished from a service consisting in the making available of a multi-sided digital interface through which users can upload and share digital content with other users, or the making available of an interface that facilitates an underlying supply of digital content directly between users. These latter services constitute a service of intermediation and should therefore also fall within the scope of DST, regardless of the nature of the underlying transaction.

Amendment 92 #

Proposal for a directive
Recital 17

(17) Taxable services consisting in the exploitation, transmission or sale of data collected about users should cover ~~only~~ data which has been generated from such users' activities in digital interfaces, but not data which has been generated from sensors or other means and collected digitally. This is because the services within the scope of DST should be those using digital interfaces as a way to create user input which they monetise, rather than services using interfaces only as a way to transmit data generated otherwise. DST should therefore. These taxable services should be those using digital interfaces as a way to create user input which they monetise. DST is not be a tax on the collection of data~~, or the use of data collected by a business for the internal purposes of that business, or the sharing of data collected by a business with other parties for no consideration. What DST should~~ as such. Instead, it target is the generation of revenues from the processing, exploitation, transmission or sale of data obtained from ~~a very specific activity (~~users' activities on digital interfaces).

Amendment 93 #

Proposal for a directive
Recital 17

(17) Taxable services consisting in the transmission of data collected about users should cover only data which has been generated from such users' activities in digital interfaces, but not data which has been generated from sensors or other means and collected digitally. This is because the services within the scope of DST should be those using digital interfaces as a way to create user input which they monetise, rather than services using interfaces only as a way to transmit data generated otherwise. DST should therefore not be a tax on the collection of data, or the use of data collected by a business for the internal purposes of that business, or the sharing of data collected by a business with other parties for no consideration. What DST should target is the generation of revenues from the transmission of data obtained from a very specific activity (users' activities on digital interfaces) rather than targeting the sale of data.

Amendment 94 #

Proposal for a directive
Recital 17 a (new)

(17a) This report should focus on taxation based on user value creation rather than expanding the remit of this proposal to the sale of data.

Amendment 95 #

Proposal for a directive
Recital 22

(22) Only certain entities should qualify as taxable persons for the purposes of DST, regardless of whether they are established in a Member State or in a non-Union jurisdiction. In particular, an entity should qualify as a taxable person only if it meets both of the following conditions: (i) the total amount of worldwide revenues reported by the entity for the latest complete financial year for which a financial statement is available exceeds EUR 750 000 000; and (ii) the total amount of taxable revenues obtained by the entity within the Union during that financial year exceeds EUR 50 000 000.

Amendment 96 #

Proposal for a directive
Recital 22

(22) Only certain entities should qualify as taxable persons for the purposes of DST, regardless of whether they are established in a Member State or in a non-Union jurisdiction. In particular, an entity should qualify as a taxable person only if it meets ~~both of~~ the following condition~~s: (i) the total amount of worldwide revenues reported by the entity for the latest complete financial year for which a financial statement is available exceeds EUR 750 000 000; and (ii)~~: the total amount of taxable revenues obtained by the entity within the Union during that financial year exceeds EUR 50 000 000.

Amendment 97 #

Proposal for a directive
Recital 22

Amendment 98 #

Proposal for a directive
Recital 23

(23) The first threshold (total annual worldwide revenues) should limit the application of DST to the companies of a certain scale, which are the ones mainly able to provide those digital services for which user contribution plays a fundamental role, and which heavily rely on extensive user networks, large user traffic, and the exploitation of a strong market position. Such business models, which depend on user value creation for obtaining revenues and are only viable if carried out by companies with a certain size, are the ones responsible for the higher difference between where their profits are taxed and where value is created. Moreover, the opportunity of engaging in aggressive tax planning lies with larger companies. That is why the same threshold has been proposed in other Union initiatives30 . Such a threshold is also intended to bring legal certainty, given that it would make it easier and less costly for companies and tax authorities to determine whether an entity is liable to DST. It also excludes small enterprises and start-ups for which the compliance burdens of the new tax would be likely to have a disproportionate effect. _________________ 30 See Article 2 of the Proposal for a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB) (COM(2016) 683 final).deleted

Amendment 99 #