The OECD’s work on the Digital Economy : gains or losses of tax revenue for European States?

Taxation - March 2019
The OECD’s work on the digitalisation of the economy is expected to remodel the ground principles governing international taxation, because the solution under discussion is expected to apply to all sectors of the economy. With the new system, large international companies would allocate part of their profits to market and to user jurisdictions, i.e. to consumption countries. Afep is concerned about the outcome of this work for European States’ tax revenue: It requests that the Commission and the Member States publish a detailed and documented report describing the position that will be defended by the EU during the negotiations. Considering the inherent risks of legal uncertainty surrounding the future application of these new legal concepts, Afep requests that European companies be prevented from risks of double taxation: a new multilateral convention implementing mandatory tax arbitration should be simultaneously negotiated by the states. The combination of these new rules with existing custom duty rules should also be examined. The present document describes the OECD’s proposals, their implications for European companies and what Afep requests with regards to this public consultation.