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Parliamentary questions
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27 June 2019
Answer given by Mr Moscovici on behalf of the European Commission
Question reference: E-001797/2019

The Commission finds that, as part of the adoption process of the proposal for a directive on the Digital Services Tax (DST), the specific conditions required for triggering Article 116 of the Treaty on the Functioning of the European Union (TFEU) are not fulfilled. In order to put forward a proposal under Article 116, it must be established that there is a difference between Member States’ provisions which creates a distortion of competition in the internal market that needs to be eliminated

The Commission considers that the multiplication of different national taxes on digital services could create barriers to the proper functioning of the internal market, which is the main reason why the harmonisation of the DST was proposed(1).

Article 116 TFEU is not a possible legal basis for proposals on tax harmonisation, such as the common consolidated corporate tax base (CCCTB) and the DST. Articles 113 and 115 TFEU are the only legal bases allowing the Council to adopt measures of approximation of Member States’ laws, regulatory or administrative provisions concerning taxation.

(1)Analysis of the impact of proposals for Directives concerning digital services, point 3.2 of SWD(2018) 81 final/2. https://ec.europa.eu/taxation_customs/sites/taxation/files/fair_taxation_digital_economy_ia_summary_21032018_en.pdf ‘In addition, EU-level action would avoid the fragmentation of the Single Market, new barriers to business or potential loopholes which would result from uncoordinated action by different Member States.’ https://ec.europa.eu/taxation_customs/sites/taxation/files/fair_taxation_digital_economy_ia_21032018.pdf

Last updated: 27 June 2019Legal notice