EU wants sellers on digital platforms to pay fair share of taxes

From 2023, tax authorities in EU27 will automatically share data on income got by these vendors of goods and services

Photo: EU Olaf Scholz.

At the ECOFIN video conference on Tuesday, the German Presidency informed the economics and finance ministers about the agreement reached at technical level on amendments to the Council directive on administrative cooperation in the field of taxation, so called 'DAC 7'. 

Ministers confirmed their support for the agreement, according which, from 2023 onwards member states' tax authorities will automatically exchange information on income earned by sellers on digital platforms.

This will help to prevent tax evasion and tax avoidance in relation with activities on such platforms, enhance tax fairness and foster a level playing field for both the platforms and their sellers.

The amendments will also improve the exchange of information and cooperation between tax authorities. It will become easier to obtain information on groups of tax payers and there will be improvements in the rules for carrying out simultaneous controls and for allowing the officials to be present in another member country during an enquiry.

The new rules also provide a framework for the competent authorities of two or more Member States to conduct joint audits. This framework will be operational in all EU27 from 2024 at the latest.

Olaf Scholz, Germany’s Federal Minister of Finance and Vice Chancellor pointed out that the digital platform economy is creating new challenges for tax administrations, in particular when services are offered across borders.

The new rules on administrative cooperation will offer Member States important tools to ensure that sellers on digital platforms pay their fair share of taxes, he said adding that this is an important step forward in adapting the EU rules to the digital economy and improving the fight against tax fraud and tax evasion. The EU takes on a leading role in the taxation of digital platforms.

The Council is expected to adopt the directive in the coming weeks, once the opinions of the European Parliament and of the European Economic and Social Committee have been received and the legal-linguistic revision has taken place.

Saying that ministers discussed extending the EU tax transparency rules to digital platforms and revising the Directive on Administrative Cooperation, EC Executive Vice-President Valdis Dombrovskis underscored that this is an important element of the tax package that the European Commission presented in July.

He thanked the German Presidency for the swift progress made just in five months. The welcome speed of progress clearly demonstrates the EU's commitment to greater tax transparency and cooperation.

When the revision comes into effect, those who make money by selling goods or services on digital platforms will also pay their fair share of taxes, he warned.

EVP Dombrovskis said this will not only ensure fair taxation and prevent tax evasion, it will also protect public revenues and support Member States in their economic recovery.

He recalled that the next step will be to integrate e-money and crypto-assets into this Directive. It will be another step in adapting our rules to new economic realities and business models.

The presidency also informed ministers about draft Council conclusions on the Commission's new Action Plan on the Capital Markets Union. The conclusions are due to be approved by the Council by written procedure after the informal video conference.

 

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