MEPs agree on new rules to tax digital companies’ revenues  


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  • MEPs added to the list of taxable services the supply of content via digital interfaces
  • Threshold of minimum taxable revenues within the EU lowered to 40 million EUR
  • Opinions adopted by overwhelming majority ahead of Council’s move

The Economic and Monetary Affairs committee on Monday proposed widening the scope of the directives on the taxation of digital businesses operating in the EU.

The Economic and Monetary Affairs committee adopted its two reports on the proposals for Council directives on the Corporate taxation of a significant digital presence and Digital Services Tax by an overwhelming majority.

Supply of digital content added to taxable services

MEPs added to the list of services that qualify as taxable revenues proposed by the Commission the supply by an entity of “content on a digital interface such as video, audio, games, or text using a digital interface”, regardless of whether the content is owned by that entity or this has acquired the rights to distribute it. This includes the possibility to tax online platforms selling digital content, such as Netflix.

Lower threshold of taxable revenues made in EU

MEPs agreed to reduce the threshold of minimum taxable revenues above which a company would be subject to the legislation. According to the committee’s position, the rules would apply to any entity having generated revenues within the EU of more than EUR 40 000 000 during the relevant financial year. The European Commission had proposed EUR 50 000 000.

To protect small and medium sized companies, the committee kept the reference to EUR 750 000 000 as the total amount of worldwide revenues reported by the entity for the relevant financial year. Any entity exceeding that amount would be taxed.

DST just a temporary solution

MEPs underlined that the DST is a temporary measure awaiting the permanent solution which would either be the adoption of the Significant Digital Presence, Common Corporate Consolidated Tax Base or similar rules reached at the OECD or UN level.


The rapporteur on the Digital Services Tax Paul Tang (S&D, NL) said: “Both the European Parliament and the European people want a more ambitious digital service tax: therefore, it is time to deliver a strong digital service tax. We need to aim for basic fairness, where everyone pays their fair share, also the multinationals and the tech giants”.

The rapporteur on the Significant Digital Presence Dariusz Rosati (EPP, PL) said: “The quarrels and mutual vetoes in the Council lead to the EU being unable to tackle the problem. The European Union should be a trendsetter, while also continuing to work on an international solution on the OECD level".

Vote results

The report on the digital services tax directive was adopted with 33 votes in favour, 2 against and 2 abstentions.

The report on the corporate taxation of a significant digital presence directive was adopted with 36 votes in favour, 1 against and 2 abstentions

Next steps

The Parliament has a consultative role when it comes to legislating on the approximation of taxation laws, regulations or administrative provisions of the Member States (Art. 115 TFEU). Therefore, it will be up to the Council to decide by unanimity on the final content of the rules. The Parliament is pushing for an approval before the end of its mandate.


In July 2013, EU ministers agreed on the need to establish a common corporate tax base. The European Commission then split its previous proposal of 2011 into two directives: a directive establishing a common corporate tax base (CCTB), and a directive on a common consolidated corporate tax base (CCCTB). Both draft directives were published in October 2016 and still wait for Council’s agreement. In its resolutions, the European Parliament strongly supported this major reform of corporate taxation and introduced a notion of “digital presence” that would enable Member States to tax digital companies.

In March 2018, the European Commission presented two distinct legislative proposals to a fairer taxation of digital activities in the EU. The first proposal (Corporate taxation of a significant digital presence), presented as the preferred solution, aims to reform corporate tax rules so that profits are registered and taxed where businesses have interaction with users through digital channels. The second proposal (Digital Services Tax) is an interim tax which covers the main digital activities that currently escape tax altogether in the EU.