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23.03.2018

Taxation of the digital economy and the EU – new rules for Google, Facebook and Co

The EU plans to implement a new tax regime covering what is often referred to as a digital permanent establishment when a significant digital presence exists, in tax lingo the digital PE. Different to the meaning of this term a digital PE might include many things, but it is far from being an “establishment”; rather it is an established fiction. In short a number of criteria such as turn over made in a country, the number of users reached, or the number of contracts concluded online, lead to a taxable nexus in a jurisdiction and to the allocation of certain profits to it and that taxes would be imposed thereon. Besides that, the EU intends, in the near-term, to introduce a new tax on revenues gained from digital activities characterized by a high involvement of users until the planned implementation of the proposed digital PE is concluded. Such services are e.g., specifically targeted advertising or the provision of platforms and marketplaces. The EU in this regard explicitly points among others at Facebook, Google, AirBnB or Uber. [more]

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