European Union: Publication of EC proposal on taxation of significant digital presence

On 21 March 2018, the European Commission issued its proposal for a Council Directive “laying down rules relating to the corporate taxation of a significant digital presence”. The proposal would reform the tax rules to include in the list of taxable revenues the profits obtained by entities that don’t have a physical presence in the European Union (EU) but provide digital services to EU users. The entities that have an annual turnover of at least EUR 7 million or provide digital services to at least 100’000 users or have more than 3’000 business users would be designated as having a taxable “digital presence” in the EU. The profits obtained by the entities reaching at least one of the three listed criteria would become taxable in the Member State in which it has the most users.