Skip to main content
June 22, 2018

European Commission Digital Tax

The EU Digital Tax to Feature 3% Rate    

The revenues of large digital companies operating in the EU could be hit by a new 3 per cent tax, according to reports.  The international news agency Reuters, said that it had seen an updated draft of an earlier European Commission proposal to tax the revenues of large digital companies based on where their users are located. The previous draft had recommended a tax rate of between 1 and 5 per cent.

If implemented, the EU digital tax would affect companies with annual worldwide revenues of a750 million (US $877 million) or more, and annual taxable revenues in the EU of over a50 million (US $58.5 million). Reuters said that the original threshold for EU revenues had been a10 million (US $11.7 million).

The EU digital tax would be levied by the countries where the digital users of each given company are located. It would capture digital advertising and online platforms that offer “intermediation services.”

According to Reuters, the EU Commission digital tax proposal is envisioned in the draft as a temporary measure. The EU digital tax would be implemented only if no agreement is reached on a more comprehensive solution to the problem of taxing the digital economy.

The Financial Times said that the EU digital tax is expected to raise approximately a4.8 billion (US $5.62 billion) a year.

If you have any questions about the EU Commission digital tax proposal, please contact the Manning Elliott Tax Team for more information. To help us keep you up to date on all future tax related articles, we invite you to subscribe to our mailing list.

The above content is believed to be accurate as of the date of posting. Canadian and US Tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.