2018/0072(CNS) | [ParlTrack]

Proposal for a directive
Article 6 – paragraph 1

1. Th~~e Commission shall evaluate the implementation of this Directive five years after its entry into for~~ree years after...[the date of entry into force of this Directive], the Commission shall conduct an assessment of the application of this Directive and present a report to the European Parliament and the Council, accompanied, if appropriate, by proposals for its review. The report shall assess, in particular, the implementation of the significant digital presence rules in different Member States, the number and type of companies covered by the definition of significant digital presence, a~~nd report to the Council thereon~~s well as the appropriateness of the criteria set out in Article 4 and whether or not absolute figures should be complemented by percentages.

Amendment 101 #

Proposal for a directive
Article 6 – paragraph 1

1. The Commission shall evaluate the implementation of this Directive ~~fiv~~three years after its entry into force and report to the Council thereon. It shall in particular examine the effectiveness of this Directive in ensuring a level playing field and fair competition between digital and traditional businesses, its impact on tax revenues in Member States and in developing countries as well as its impact on SMEs.

Amendment 102 #

Proposal for a directive
Article 6 – paragraph 1

1. The Commission shall evaluate the implementation of this Directive five years after its entry into force and report to the ~~Council thereon~~European Parliament and the Council thereon. Particular emphasis shall be placed on the effectiveness of tax collection across Member States and the impact of this Directive on companies and especially SMEs.

Amendment 103 #

Proposal for a directive
Article 6 – paragraph 1

1. The Commission shall evaluate the implementation of this Directive ~~fiv~~three years after its entry into force and report to the European Parliament and the Council thereon.

Amendment 104 #

Proposal for a directive
Article 6 a (new)

Article 6a Exercise of the delegation 1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article. 2. The power to adopt delegated acts referred to in Article 4 shall be conferred on the Commission for an indeterminate period of time from the date of entry into force of this Directive. 3. The delegation of power referred to in Article 4 may be revoked at any time by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force. 4. As soon as it adopts a delegated act, the Commission shall notify it to the Council. 5. A delegated act adopted pursuant to Article 4 shall enter into force only if no objection has been expressed by the Council within a period of [two months] of notification of that act to the Council or if, before the expiry of that period, the Council has informed the Commission that it will not object. That period shall be extended by [two months] at the initiative of the Council.

Amendment 105 #

Proposal for a directive
Article 6 a (new)

Article 6a Sunset clause on Council Directive 2018/XX/EU on the Digital Service Tax With the implementation of this directive the Council directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services1a shall expire. _________________ 1a OJ.../Not yet published in the Official Journal

Amendment 106 #

Proposal for a directive
Article 6 b (new)

Article 6b Informing the European Parliament The European Parliament shall be informed of the adoption of delegated acts by the Commission, of any objection formulated to them, and of the revocation of that delegation of powers by the Council.

Amendment 107 #

Proposal for a directive
Article 6 b (new)

Article 6b Additional measure The concept of permanent establishment including a digital significant presence shall be included in the Council Directive on a Common Consolidated Corporate Tax Base.

Amendment 108 #

Proposal for a directive
Article 6 c (new)

Article 6c Mandate to the European Commission to negotiate tax treaties with third countries Member States shall provide a delegation of powers to the Commission to negotiate on their behalf the revision or adoption of tax treaties with third countries in accordance with the rules set out in this Directive, in particular as regards to the inclusion of the definition of a significant digital presence for tax purposes.

Amendment 109 #

Proposal for a directive
Article 6 d (new)

Article 6d Minimum EU effective tax rate Three years after the date of implementation of this Directive, the Commission shall present a proposal in view of harmonising corporate taxation at EU level by establishing a mandatory minimum effective corporate tax rate of at least 20%, whilst no upper limit shall be set.

Amendment 110 #

Proposal for a directive
Article 7 – paragraph 2

2. The DigiTax Committee shall consist of representatives of the Member States, the European Parliament and of the Commission. The chair of the Committee shall be a representative of the Commission. Secretarial services for the Committee shall be provided by the Commission. Trade Union representatives from national tax administrations shall be allowed to attend as observers.

Amendment 111 #

Proposal for a directive
Article 7 – paragraph 2

2. The DigiTax Committee shall consist of representatives of the Member States and of the Commission. The chair of the Committee shall be a representative of the Commission. Secretarial services for the Committee shall be provided by the Commission. The European Parliament shall be represented with an observer.

Amendment 112 #

Proposal for a directive
Article 7 – paragraph 2

2. The DigiTax Committee shall consist of representatives of the Member States and of the Commission and an observer of the European Parliament. The chair of the Committee shall be a representative of the Commission. Secretarial services for the Committee shall be provided by the Commission.

Amendment 113 #

Proposal for a directive
Article 7 – paragraph 2

2. The DigiTax Committee shall consist of representatives of the Member States, Parliament and of the Commission. The chair of the Committee shall be a representative of the Commission. Secretarial services for the Committee shall be provided by the Commission.

Amendment 114 #

Proposal for a directive
Article 7 – paragraph 4

4. The DigiTax Committee shall examine questions on the application of this Directive, as raised by the chair of the Committee, whether on the chair's own initiative or at the request of the representative of a Member State, at the request of representative of the European Parliament or at the request of Trade Union representatives from national tax administrations, and shall inform the Commission of its conclusions.

Amendment 115 #

Proposal for a directive
Article 7 – paragraph 4

4. The DigiTax Committee shall examine questions on the application of this Directive, as raised by the chair of the Committee, whether on the chair's own initiative or at the request of the representative of a Member State, and shall inform the European Parliament and the Commission of its conclusions.

Amendment 116 #

The DigiTax Committee shall draw up an annual report on its activities and findings and shall share this report with Parliament, Council and Commission.

Amendment 117 #

Jonás FERNÁNDEZ, Ramón JÁUREGUI ATONDO

Proposal for a directive
Article 7 – paragraph 4 a (new)

4a. The DigiTax Committee shall publish the agendas and minutes of its meetings, as well as all relevant documents.

Amendment 118 #

Proposal for a directive
Article 8 – paragraph 1

The data that may be collected from the users for the purposes of applying this Directive shall be limited to data indicating the Member State in which the users are located, without allowing for identification of the user. Without prejudice of paragraph 1, any processing of personal data under this Directive shall comply with the provisions laid down on Regulation (EU) 2016/679 of the European Parliament and of the Council.

Amendment 119 #

Proposal for a directive
Article 8 – paragraph 1

The data that may be collected from the users for the purposes of applying this Directive shall be limited to data indicating the Member State in which the users are located, without allowing for identification of the user. Any processing of personal data carried out for the purposes of applying this Directive shall fully comply with Regulation (EU) 2016/679.

Amendment 120 #

Markus FERBER

Proposal for a directive
Article 9 a (new)

Article 9a Link with Digital Services Tax on Revenues Once the provisions laid down in this directive become applicable, the provisions laid down in Directive [please insert: Directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services] shall automatically cease to apply.

Amendment 15 #

Draft legislative resolution
Paragraph 1

1. ~~Approve~~Rejects the Commission proposal ~~as amended~~;

Amendment 16 #

Draft legislative resolution
Paragraph 3 a (new)

3a. Recalls that the Commission proposal for establishing a significant digital presence is not in line with the much broader definition laid down in the Common Consolidated Corporate Tax Base (CCCTB) and that definitions codified in EU law need to be consistent.

Amendment 17 #

Draft legislative resolution
Paragraph 3 b (new)

3b. Recalls that the OECD’s digital economy group has concluded after a two-year period of studying the topic that it was impossible to ring-fence the “digital economy” considering that digitalisation has permeated nearly all industries and sectors: “[b]ecause the digital economy is increasingly becoming the economy itself, it would be difficult, if not impossible, to ring-fence the digital economy from the rest of the economy for tax purposes.” (OECD 2015; p.11) Ring-fencing would require strong political value judgements about the legitimacy of certain business models and might open the door for increased state interventionism in Europe’s economies. It would also stand in conflict with the Treaty of Lisbon, stating that the Union “shall promote scientific and technological advance.” (Article 3).

Amendment 18 #

Draft legislative resolution
Paragraph 3 c (new)

3c. Recalls that the Commission proposal contradicts the current OECD principle which states that taxation should occur where value is created, adding the complexity of whether a user’s consumption of a service is creating value. Since the concept of permanent establishment is governed by double taxation treaties in international law and therefore binding, not expandable, it is doubtful whether the Commission proposal is legally justified.

Amendment 19 #

Draft legislative resolution
Paragraph 3 d (new)

3d. Recalls that work is currently ongoing at the OECD to find a solution to the question of defining a "digital presence" that is in line with OECD principles and international law and can be agreed to by the G20.Supports a global solution awaiting the OECD proposal. Requests that the Commission present a proposal to Parliament based on the OECD's proposal for a global solution.

Amendment 20 #

Proposal for a directive
Recital 1

(1) Rapid transformation of the global economy as a result of digitalisation is putting new pressures on corporate tax systems both at Union level and internationally, and calling into question the ability to establish where digital companies should pay their taxes and how much they should pay. Although the need to adapt corporate tax rules to the digital economy is recognised at international level by bodies such as the G20, reaching an agreement at global level is likely to be challenging and not taking place in a near future.

Amendment 21 #

(1) Rapid transformation of the global economy as a result of digitalisation is putting new pressures on corporate tax systems both at Union level and internationally, and calling into question the ability to establish where digital companies should pay their taxes and how much they should pay. Although the need to adapt corporate tax rules to the digitalisation of the economy is recognised at international level by bodies such as the G20, reaching an agreement at global level is likely to be challenging.

Amendment 22 #

Proposal for a directive
Recital 1 a (new)

(1a) Too often, multinational companies that heavily rely upon digital activities make arrangements to transfer their profits to tax havens or to countries with a lower corporate tax rate, which allows them to pay less or no taxes. The concept of digital significant presence will provide a precise and binding definition of the criteria according to which a multinational company is deemed to have a permanent establishment in a given country. This will force digital companies to pay their taxes where their real economic activity occurs.

Amendment 23 #

Proposal for a directive
Recital 1 a (new)

(1a) Notwithstanding the difficulties of reaching a global agreement, such an agreement should still be pursued with great effort. As called for in the European Parliament’s inquiry committee into money laundering, tax avoidance and tax evasion (PANA) and in its special committee on tax rulings and other measures similar in nature or effect (TAXE2), an empowered UN tax body should be installed to serve as the forum for debates and discussions on said agreement and other matters related to the international tax system.

Amendment 24 #

Proposal for a directive
Recital 1 a (new)

(1a) In the digital age, now that data has become the new economic resource, as opposed to labour and traditional resources in the past, a new approach needs to be developed in order to have a fair and sustainable system of digital taxation.

Amendment 25 #

Proposal for a directive
Recital 1 b (new)

(1b) Digitalisation affects the whole economy with many firms using multi- channel models; thus, instead of creating special regimes for digital businesses, international tax rules should be reformed, based on a principal of neutrality between different business models, both digital and non-digital, and regardless of the extent or form of digitalisation, including multi-channel models, recognising the economic reality businesses operate in today.

Amendment 26 #

Proposal for a directive
Recital 1 c (new)

(1c) In particular, this means reforming the definition of a permanent establishment to be more in line with the concept of a permanent establishment as defined in the 2011 UN model tax convention.

Amendment 27 #

Proposal for a directive
Recital 2

(2) The Base Erosion and Profit Shifting (BEPS) Action 1 report on "Addressing the Tax Challenges of the Digital Economy" released by the OECD in October 2015 set out various different approaches for taxing the digital economy which were further examined in the OECD "Tax challenges Arising from Digitalisation – Interim Report 2018". As the digital transformation of the economy accelerates there is a growing need to find solutions to ensure a fair and effective taxation of digital companies. However, to date the OECD work on taxing the digital economy has not delivered sufficient progress, which illustrates the need for the Union to advance on this matter at Union level. This Directive should also serve as a basis for further work at the international level. In the absence of a common Union approach, Member States will adopt unilateral solutions, which will lead to regulatory uncertainty and will be difficult for companies which operate cross-border and for tax authorities.

Amendment 28 #

Jonás FERNÁNDEZ, Ramón JÁUREGUI ATONDO

Proposal for a directive
Recital 2

(2) The Base Erosion and Profit Shifting (BEPS) Action 1 report on "Addressing the Tax Challenges of the Digital Economy" released by the OECD in October 2015 set out various different approaches for taxing the digital economy which were further examined in the OECD "Tax challenges Arising from Digitalisation – Interim Report 2018". As the digital transformation of the economy accelerates there is a growing and urgent need to find solutions to ensure a fair and effective taxation of digital companies. The European Union should not wait for the results of the OECD works to tackle this issue, as progress at international level to reach a consensus can be considered too slow. The Union should set the trend by already now adapting its corporate taxation system to the digital economy and then advocate for such measures to be adopted also at a global level.

Amendment 29 #

Ashley FOX

Proposal for a directive
Recital 2

(2) The Base Erosion and Profit Shifting (BEPS) Action 1 report on "Addressing the Tax Challenges of the Digital Economy" released by the OECD in October 2015 set out various different approaches for taxing the digital economy which were further examined in the OECD "Tax challenges Arising from Digitalisation – Interim Report 2018". As the digital transformation of the economy accelerates there is a growing need to find solutions to ensure a fair and effective taxation of digital companies. However, to date the OECD work on taxing the digital economy has not delivered sufficient progress, which illustrates the need for the Union to advance on this matter at Union level. This Directive should also serve as a basis for further work at the international level. However, notes that Member States should not be prevented from adopting unilateral solutions.

Amendment 30 #

Alfred SANT

Proposal for a directive
Recital 2

(2) The Base Erosion and Profit Shifting (BEPS) Action 1 report on "Addressing the Tax Challenges of the Digital Economy" released by the OECD in October 2015 set out various different approaches for taxing the digital economy which were further examined in the OECD "Tax challenges Arising from Digitalisation – Interim Report 2018". As the digital transformation of the economy accelerates there is a growing need to find solutions to ensure a fair and effective taxation of digital companies. There is indeed a common interest in maintaining a coherent yet relevant set of international rules. Therefore, the EU shall continue to work towards a consensus-based solution in the BEPS Inclusive Framework.

Amendment 31 #

Proposal for a directive
Recital 2 a (new)

(2a) The global nature of the digital economy, reflects the importance of finding an international solution and common tax rules to the taxation of the digital economy, and justifies the Commission's efforts within international fora, namely with the OECD, to reach such an agreement.

Amendment 32 #

Proposal for a directive
Recital 2 a (new)

(2a) Progress on the OECD level has been slow and results have been disappointing. Instead of at the OECD, discussions and debates on international tax matters should thus take place at UN level at an empowered UN tax body, ensuring the participation of all countries.

Amendment 33 #

Proposal for a directive
Recital 4

(4) The European Council Conclusions of 19 October 2017 underlined the need for an effective and fair taxation system fit for the digital era and looked forward to appropriate Commission proposals by early 2018.15 The ECOFIN Council Conclusions of 5 December 2017 underlined that a globally accepted definition of permanent establishment and the related transfer pricing and profit attribution rules should also remain pivotal when addressing the challenges of taxation of profits of the digital economy" and encourages "close cooperation between the EU, the OECD and other international partners in responding to the challenges of taxation of profits of the digital economy.16 In this regard, Member States should be required to include rules in their national corporate income tax systems in order to exercise their taxing rights. Therefore, the various applicable corporate taxes in the Member States should be clarified. These rules should extend the definition of a permanent establishment and establish a taxable nexus for a significant digital presence in their respective jurisdictions. In addition, general principles for allocating taxable profits to such a digital presence should be laid down. In principle, those rules should apply to all corporate taxpayers irrespective of their size and of where they are tax resident, whether in the Union or elsewhere. Furthermore, the common rules set out in this Directive call for a broader harmonisation of the corporate tax base in the Union for all corporations. This is why this Directive should not hamper or delay works on the Proposal for a Common Consolidated Corporate Tax Base. _________________ 15 European Council meeting (19 October 2017) – Conclusions (doc. EUCO 14/17). 16 Council conclusions (5 December 2017) – Responding to the challenges of taxation of profits of the digital economy (FISC 346 ECOFIN 1092).

Amendment 34 #

Proposal for a directive
Recital 5

(5) However, the rules should not apply to entities that are tax resident in a non-Union jurisdiction with which the Member State of the significant digital presence has a Double Tax Convention in force, unless the Convention includes provisions on a significant digital presence which creates similar rights and obligations in relation to the non-Union jurisdiction as are created by this Directive. This is to avoid any conflict with Double Tax Conventions with non-Union jurisdictions, given that non-Union jurisdictions are not generally bound by Union law. Nevertheless, for the provisions contained in this text to be fully effective, Member States are urged to adapt, where needed, their Double Tax Conventions currently in force in order to include provisions on a significant digital presence creating similar rights and obligations in relation to the non-Union jurisdiction as are created by this Directive. The European Commission shall provide Member States with all needed support in this regard.

Amendment 35 #

Proposal for a directive
Recital 5

(5) However, the rules should not apply to entities that are tax resident in a non-Union jurisdiction with which the Member State of the significant digital presence has a Double Tax Convention in force, unless the Convention includes provisions on a significant digital presence which creates similar rights and obligations in relation to the non-Union jurisdiction as are created by this Directive. This is to avoid any conflict with Double Tax Conventions with non-Union jurisdictions, given that non-Union jurisdictions are not generally bound by Union law. However, Member States are strongly encouraged to mandate the Commission to negotiate on their behalf a modification of these Double Tax Conventions, in order to uniformly adapt the definition of permanent establishment and the creation of a taxable nexus for a significant digital presence.

Amendment 36 #

Proposal for a directive
Recital 6

(6) In order to provide for a robust definition of a taxable nexus of a digital business in a Member State it is necessary that such a definition is based on the revenues from the supply of digital services, the number of users or the number of business contracts for digital services. The applicable thresholds should reflect the significance of the digital presence for different types of business models and accommodate the different degrees of contribution to the process of value creation. Furthermore, they should ensure a compatible treatment in different Member States, irrespective of their size, and leave out trivial cases. ~~The sale of goods or services which is facilitated by using the internet or an electronic network should not be regarded as a digital service within the meaning of this Directive.~~

Amendment 37 #

Proposal for a directive
Recital 6

(6) In order to provide for a robust definition of a taxable nexus of a digital business in a Member State it is necessary that such a definition is based on the revenues generated from the supply of digital services, the number of users or the number of business contracts for digital services. The applicable thresholds should reflect the significance of the digital presence for different types of business models and accommodate the different degrees of contribution to the process of value creation. Furthermore, they should ensure a compatible treatment in different Member States, irrespective of their size, and leave out trivial cases. ~~The sale of goods or services which is facilitated by using the internet or an electronic network should not be regarded as a digital service within the meaning of this Directive~~In its review, the Commission should assess the appropriateness of the criteria set out in this Directive, in particular with regards to the pursuit of the latter objectives, and whether absolute figures should be complemented by relative numbers (in percentages).

Amendment 38 #

Proposal for a directive
Recital 7

(7) To enable an enterprise's significant digital presence to be taxed in another jurisdiction in accordance with the domestic law of that jurisdiction, it is necessary to establish the principles of attributing profits to that significant digital presence. The rules should be built on the current principles for profit attribution and be based on a f~~unctional analysis of the functions performed, assets used and risks assumed by a significant digital presence in performing its economically significant activities through a digital interface~~ormulary apportionment based on four equally weighted factors, namely labour, assets, sales by destination, and collection and use of personal data of online platforms and services users. Particular attention should be paid to the fact that a significant part of the value of a digital business is created where the users are based and where the data related to the users is collected and processed as well as to where the digital services are provided. Since economically significant activities performed by a significant digital presence contribute in a unique manner to value creation in digital business models, the ~~profit split method~~formula for apportionment should normally be used for arriving at a fair allocation of profits to the significant digital presence. However, this should not prevent a taxpayer from using an alternative method in line with internationally accepted principles if the taxpayer can prove that, based on the outcome of the functional analysis, an alternative method in line with internationally accepted principles is more appropriate. It is also essential that the profit splitting factors bear a strong correlation with the creation of value.

Amendment 39 #

Proposal for a directive
Recital 7

(7) To enable an enterprise's significant digital presence to be taxed in another jurisdiction in accordance with the domestic law of that jurisdiction, it is necessary to establish the principles of attributing profits to that significant digital presence. The rules should be built on the current principles for profit attribution and be based on a functional analysis of the functions performed, assets used and risks assumed by a significant digital presence in performing its economically significant activities through a digital interface. Particular attention should be paid to the fact that a significant part of the value of a digital business is created where the users are based and where the data related to the users is collected and processed as well as to where the digital services are provided. Since economically significant activities performed by a significant digital presence contribute in a unique manner to value creation in digital business models, the profit split method should normally be used for arriving at a fair allocation of profits to the significant digital presence. However, this should not prevent a taxpayer from using an alternative method in line with internationally accepted principles if the taxpayer can prove that, based on the outcome of the functional analysis, an alternative method in line with internationally accepted principles is more appropriate. It is also essential that the profit splitting factors bear a strong correlation with the creation of value.

Amendment 40 #

Proposal for a directive
Recital 7

(7) To enable an enterprise's significant digital presence to be taxed in another jurisdiction in accordance with the domestic law of that jurisdiction, it is necessary to establish the principles of attributing profits to that significant digital presence. The rules should be built on the current principles for profit attribution and be based on a functional analysis of the functions performed, assets used and risks assumed by a significant digital presence in performing its economically significant activities through a digital interface. Information from the country-by-country reports and master files of companies should be used in addition to the functional analysis. The functional analysis should in any case be based on where economic activity takes place in reality as opposed to where it is contractually located. Particular attention should be paid to the fact that a significant part of the value of a digital business is created where the users are based and where the data related to the users is collected and processed as well as to where the digital services are provided. Since economically significant activities performed by a significant digital presence contribute in a unique manner to value creation in digital business models, the profit split method should ~~normally~~ be used for arriving at a fair allocation of profits to the significant digital presence. However, this should not prevent a taxpayer from using an alternative method in line with internationally accepted principles if the taxpayer can prove that, based on the outcome of the functional analysis, an alternative method in line with internationally accepted principles is more appropriate. It is also essential that the profit splitting factors bear a strong correlation with the creation of value.

Amendment 41 #

Proposal for a directive
Recital 7 a (new)

(7a) A harmonised definition of a permanent establishment, including a significant digital presence will allow Member States to better collect taxes arising from the digital sector. To fully deliver, such harmonisation should come along with an increased coordination of corporate income tax rates at European level. To ensure a sufficient and fair level of the digital sector, a minimum effective corporate tax rate of 18% should be adopted by all Member States.

Amendment 42 #

Proposal for a directive
Recital 8

(8) A key objective of this Directive is to improve the resilience of the internal market as a whole in order to address the challenges of taxation of the digitalised economy, while respecting the principle of tax neutrality but also the free movement of services in the European Single Market. This objective cannot be sufficiently achieved by the Member States acting individually because digital businesses are able to operate cross-border without having any physical presence in a jurisdiction and rules are therefore needed to ensure that they pay taxes in the jurisdictions where they make profits. Given this cross-border dimension an initiative at Union level adds value in comparison with what a multitude of national measures could attain. A common initiative across the internal market is required to ensure a harmonised application of the rules on a significant digital presence within the Union. Unilateral and divergent approaches by each Member State could be ineffective and fragment the Single Market by creating national policy clashes, distortions and tax obstacles for businesses in the Union. Since the objectives of this Directive can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives. This directive does not imply a harmonisation of corporate tax rates in the EU and, therefore, it does not restrict Member States' capability set the corporate tax rates applicable to digital services' revenues on their own territory.

Amendment 43 #

Proposal for a directive
Recital 8

(8) A key objective of this Directive is to improve the resilience of the internal market as a whole in order to address the challenges of taxation of the digitalised economy. This objective cannot be sufficiently achieved by the Member States acting individually because digital businesses are able to operate cross-border without having any physical presence in a jurisdiction and rules are therefore needed to ensure that they pay taxes in the jurisdictions where they make profits. Given this cross-border dimension an initiative at Union level adds value in comparison with what a multitude of national measures could attain. A common initiative across the internal market is required to ensure a harmonised application of the rules on a significant digital presence within the Union. Unilateral and divergent approaches by each Member State could be ineffective and fragment the Single Market by creating national policy clashes, distortions and tax obstacles for businesses in the Union. Since the objectives of this Directive can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

Amendment 44 #

Alfred SANT

Proposal for a directive
Recital 8

(8) A key objective of this Directive is to improve the resilience of the internal market as a whole in order to address the challenges of taxation of the digitalised economy. This objective cannot be sufficiently achieved by the Member States acting individually because digital businesses are able to operate cross-border without having any physical presence in a jurisdiction and rules are therefore needed to ensure that they pay taxes in the jurisdictions where they make profits. Given this cross-border dimension an initiative at Union level adds value in comparison with what a multitude of national measures could attain. A common initiative across the internal market is required to ensure a harmonised application of the rules on a significant digital presence within the Union. Unilateral and divergent approaches by each Member State could be ineffective and fragment the Single Market by creating national policy clashes, distortions and tax obstacles for businesses in the Union. Specific attention should be given to ensure that the approach is not risking to favour an EU solution skewed against smaller markets. Since the objectives of this Directive can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

Amendment 45 #

Proposal for a directive
Recital 8

(8) A key objective of this Directive is to improve the resilience of the internal market as a whole in order to address the challenges of taxation of the digitalised economy. This objective cannot be sufficiently achieved by the Member States acting individually because digital businesses are able to operate cross-border without having any or having only a small physical presence in a jurisdiction and rules are therefore needed to ensure that they pay taxes in the jurisdictions where they make profits. Given this cross- border dimension an initiative at Union level adds value in comparison with what a multitude of national measures could attain. A common initiative across the internal market is required to ensure a harmonised application of the rules on a significant digital presence within the Union. Unilateral and divergent approaches by each Member State could be ineffective and fragment the Single Market by creating national policy clashes, distortions and tax obstacles for businesses in the Union. Since the objectives of this Directive can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

Amendment 46 #

Proposal for a directive
Recital 8 a (new)

(8a) If this proposal does not result in an agreement and therefore fails to eliminate distortions of competition and tax obstacles for businesses in the Union, the European Commission should issue a new proposal based on Article 116 of the Treaty on the Functioning of the European Union, whereby the European Parliament and the Council act in accordance with the ordinary legislative procedure to issue the necessary directives.

Amendment 47 #

Proposal for a directive
Recital 8 a (new)

(8a) With the view of increasing the resilience of the Union’s tax system further, the application of the ordinary legislative procedure (Article 114 TFEU) for legislation related to corporate income taxation should be considered.

Amendment 48 #

Ashley FOX

Proposal for a directive
Recital 8 a (new)

(8a) The concept of a significant digital presence and the solutions presented in this Directive should not become part of a Council Directive on a Common consolidated corporate tax base.

Amendment 49 #

Proposal for a directive
Recital 9

(9) It is necessary that any processing of personal data carried out in the context of this Directive, should be conducted in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council17 , including obligations to provide appropriate technical and organisational measures to comply with the obligations imposed by that Regulation, in particular those relating to the lawfulness of the processing, the security of the processing activities, the provision of information and the rights of data subjects, data protection by design and by default. Whenever possible, personal data should be rendered anonymous. The data that may be collected from the users for the purposes of applying this Directive should be strictly limited to data indicating the Member State in which the users are located, without allowing for identification of the user. _________________ 17 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p.1).

Amendment 50 #

Proposal for a directive
Recital 9

(9) It is necessary that any processing of personal data carried out in the context of this Directive, should be conducted in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council17 , including obligations to provide appropriate technical and organisational measures to comply with the obligations imposed by that Regulation, in particular those relating to the lawfulness of the processing, the security of the processing activities, the provision of information and the rights of data subjects, data protection by design and by default, with due regard to the principles of necessity and proportionality. Whenever possible, personal data should be rendered anonymous. _________________ 17 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p.1).

Amendment 51 #

Proposal for a directive
Recital 9

(9) It is necessary that any processing of personal data carried out in the context of this Directive, should be conducted in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council17 , including obligations to provide appropriate technical and organisational measures to comply with the obligations imposed by that Regulation, in particular those relating to the lawfulness of the processing, the security of the processing activities, the provision of information and the rights of data subjects, data protection by design and by default. Whenever possible, personal data should be rendered anonymous, notably data regarding the geographical location of the user. _________________ 17 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p.1).

Amendment 52 #

Petr JEŽEK

Proposal for a directive
Recital 10

(10) The Commission should evaluate the implementation of this Directive ~~fiv~~three years after its entry into force and report to the Council ~~thereon. Member~~and the European Parliament thereon. That implementation report should include at least the following points: the impact of the system of taxation provided for in this Directive on Member States’ revenues, the impact of this Directive on companies and in particular, on small and medium-sized enterprises, the impact on users' personal data and the impact on the internal market as a whole, with particular regard to possible distortion of competition between companies subject to the new rules laid down in this Directive. States should communicate to the Commission all information necessary for this evaluation. An advisory DigiTax Committee should be established to examine questions on the application of the Directive.

Amendment 53 #

Proposal for a directive
Recital 10

(10) The Commission should evaluate the implementation of this Directive ~~fiv~~three years after its entry into force and report to the ~~Council thereon~~European Parliament and the Council thereon, examining its effectiveness in ensuring a level playing field among different businesses in the EU market and its impact on SMEs and on tax revenues in EU Member States as well as in developing countries. Member States should communicate to the Commission all information necessary for this evaluation. An advisory DigiTax Committee should be established to examine questions on the application of the Directive.

Amendment 54 #

Proposal for a directive
Recital 10

(10) The Commission should evaluate the implementation of this Directive ~~fiv~~three years after its entry into force and report to the European Parliament and to the Council thereon. Member States should communicate to the Commission all information necessary for this evaluation. An advisory DigiTax Committee should be established to examine questions on the application of the Directive. This Committee should publish its agendas, the minutes of its meetings and all relevant documents. Its participants should be cleared of any conflict of interest before their selection.

Amendment 55 #

Proposal for a directive
Recital 10

(10) The Commission should evaluate the implementation of this Directive five years after its entry into force and report to the ~~Council thereon~~European Parliament and the Council thereon, notably on the administrative burden and additional costs for companies and especially SMEs. Member States should communicate to the Commission all information necessary for this evaluation. An advisory DigiTax Committee should be established to examine questions on the application of the Directive. An observer of the European Parliament should be invited to attend its meetings.

Amendment 56 #

Proposal for a directive
Recital 10

(10) The Commission should evaluate the implementation of this Directive ~~fiv~~three years after its entry into force and report to the European Parliament and the Council thereon. Member States should communicate to the Commission all information necessary for this evaluation. An advisory DigiTax Committee should be established to examine questions on the application of the Directive.

Amendment 57 #

Proposal for a directive
Recital 10 a (new)

(10a) Given the administrative costs for a significant digital presence, it should be ensured that small and medium-sized enterprises (SMEs) do not fall unintentionally fall within the scope of this Directive. The Commission should, as part of the review process, examine the extent to which this Directive adversely affects SMEs.

Amendment 58 #

Proposal for a directive
Recital 12 a (new)

(12a) In order to ensure legal certainty and to avoid situations of double taxation or double non-taxation as well as to limit tax avoidance opportunities, it is essential that Member States set out similar tax rules as regards to third countries, in particular when it comes to the definition of a significant digital presence. Therefore, Member States should authorise the Commission to negotiate on their behalf in order to either revise or adopt tax treaties with third countries in accordance with the rules set out in this Directive. It will allow to have a comprehensive global taxation environment for the digital economy.

Amendment 59 #

Markus FERBER

Proposal for a directive
Recital 12 a (new)

(12a) As the provisions laid down in this directive are meant to provide a permanent and comprehensive solution to the question of digital taxation, the interim solution of a digital services tax as provided for in the 'directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services' shall automatically cease to apply once the provisions laid down in this directive become applicable.

Amendment 60 #

Proposal for a directive
Recital 12 a (new)

(12a) In order to set up a coherent and consistent corporate tax base framework for all corporations in the Union, regardless of their size, the provisions contained in this Directive are bound to be integrated in the Common Consolidated Corporate Tax Base to be adopted by the Council.

Amendment 61 #

Proposal for a directive
Recital 12 b (new)

(12b) In order to create a level playing field and to eliminate tax competition and the resulting race to the bottom as regards corporate taxation levels, a minimum effective corporate tax rate should be proposed by the Commission three years after the date of implementation of the present Directive. The objective is to avoid transferring unfair competition on the tax base to unfair competition on the tax rates. The proposal of the Commission should set a minimum corporate tax rate of at least 20%.

Amendment 62 #

Proposal for a directive
Article 2 – paragraph 1

This Directive applies to entities irrespective of their size and of where they are resident for corporate tax purposes, whether in a Member State or in a third country.

Amendment 63 #

Proposal for a directive
Article 2 – paragraph 2 a (new)

To ease future harmonisation of the concept of a permanent establishment including a significant digital presence, Member States may mandate the Commission to negotiate conventions for the avoidance of double taxation, with a view to also avoid double non-taxation.

Amendment 64 #

Proposal for a directive
Article 3 – paragraph 1 – point 1 a (new)

(1a) 'consolidated tax base' means the consolidated net taxable revenue of the group members, as calculated on a consistent accounting basis applicable to all group members, in accordance with the Proposal for a Council Directive on a Common Corporate Tax Base 2016/xx/EU;

Amendment 65 #

Proposal for a directive
Article 3 – paragraph 1 – point 5 – paragraph 1 – point c a (new)

(ca) the sale of goods or services which are contracted online via digital interfaces ('e-commerce' platforms);

Amendment 66 #

Proposal for a directive
Article 3 – paragraph 1 – point 5 – paragraph 1 – point e a (new)

(ea) the sale of goods or services which are contracted online via a digital interface;

Amendment 67 #

Proposal for a directive
Article 3 – paragraph 1 – point 5 – paragraph 2

Digital services shall not include the services listed in Annex III ~~or the sale of goods or other services which is facilitated by using the internet or an electronic network~~.

Amendment 68 #

Proposal for a directive
Article 3 – paragraph 1 – point 5 – paragraph 2

Digital services shall not include the services listed in Annex III ~~or the sale of goods or other services which is facilitated by using the internet or an electronic network~~.

Amendment 69 #

Proposal for a directive
Article 3 – paragraph 1 – point 5 – paragraph 2

Digital services shall not include the services listed in Annex III ~~or the sale of goods or other services which is facilitated by using the internet or an electronic network~~.

Amendment 70 #

Proposal for a directive
Article 4.º – paragraph 3 – point a

(a) the proportion of total revenues obtained in that tax period and resulting from the supply of those digital services to users located in that Member State in that tax period exceeds EUR 71 000 000;

Amendment 71 #

Proposal for a directive
Article 4 – paragraph 3 – point a

Amendment 72 #

Proposal for a directive
Article 4 – paragraph 3 – point a

Amendment 73 #

Proposal for a directive
Article 4 – paragraph 3 – point a

(a) the ~~proportion of total revenues obtained in~~total amount of revenues of thate tax ~~period and~~payer resulting from the supply of those digital services to users located in that Member State in that tax period exceeds EUR 75 000 000;

Amendment 74 #

Proposal for a directive
Article 4.º – paragraph 3 – point b

(b) the number of users of one or more of those digital services who are located in that Member State in that tax period exceeds 1020 000;

Amendment 75 #

Proposal for a directive
Article 4 – paragraph 3 – point b

(b) the number of users of one or more of those digital services who are located in that Member State in that tax period exceeds 100 000;

Amendment 76 #

Proposal for a directive
Article 4 – paragraph 3 – point c

(c) the number of business contracts for the supply of any such digital service that are concluded in that tax period by users located in that Member State exceeds 31 000.

Amendment 77 #

Proposal for a directive
Article 4 – paragraph 3 – point c

(c) the number of business contracts for the supply of any such digital service that are concluded in that tax period by users located in that Member State exceeds 31 000.

Amendment 78 #

Proposal for a directive
Article 4.º – paragraph 3 – point c

(c) the number of business contracts for the supply of any such digital service that are concluded in that tax period by users located in that Member State exceeds ~~3 0~~1 500.

Amendment 79 #

Proposal for a directive
Article 4 – paragraph 3 – point c a (new)

(ca) the volume of data in the form of digital content collected by the taxpayer in a taxable year exceeds 10 % of the group’s overall stored digital content.

Amendment 80 #

Proposal for a directive
Article 4 – paragraph 3 a (new)

3a. The Commission shall be empowered to adopt delegated acts in accordance with Article 6a in view of amending this Directive by adjusting the factors set out in points (a), (b), (c) of this paragraph, notably on the basis of its assessment report and of progress in international agreements.

Amendment 81 #

Proposal for a directive
Article 4 – paragraph 6

6. The Member State where a user's device is used shall be determined by reference to the Internet Protocol (IP) address of the device or, if more accurately, any other method of geolocation. , without allowing for identification of the user, in accordance with Regulation (EU) No 2016/679 on data protection. The Member States' tax authority shall be informed of the method used to determine the location of users.

Amendment 82 #

Proposal for a directive
Article 4 – paragraph 7

7. The proportion of total revenues referred to in paragraph 3(a) shall be determined in proportion to the number of times that devices are used in that tax period by users located anywhere in the world to access the digital interface through which the digital services are supplied.deleted

Amendment 83 #

Proposal for a directive
Article 4 – paragraph 7 a (new)

7a. As establishing corporate tax rates is a sovereign decision of Member States, each of them retains the right to fix the corporate tax rate that will be applicable to digital services’ revenues on its own territory.

Amendment 84 #

Ashley FOX

Proposal for a directive
Article 4 – paragraph 7 a (new)

Amendment 85 #

Proposal for a directive
Article 4 – paragraph 7 a (new)

7a. A taxpayer shall be required to disclose to the tax authorities all information relevant to the determination of the significant digital presence in accordance with this Article.

Amendment 86 #

Proposal for a directive
Article 4 – paragraph 7 a (new)

7a. A taxpayer shall be required to disclose to the tax authorities all information relevant to the determination of significant digital presence in accordance with this Article.

Amendment 87 #

Proposal for a directive
Article 5 – paragraph 2

2. The profits attributable to or in respect of the significant digital presence shall be those that the digital presence would have earned if it had been a separate and independent enterprise performing the same or similar activities under the same or similar conditions, in particular in its dealings with other parts of the enterprise, taking into account the functions performed, assets used and risks assumed, through a digital interfacproportionate to the economic reality of the business activity in the corresponding Member State.

Amendment 88 #

Proposal for a directive
Article 5 – paragraph 2

2. The determination of the profits attributable to or in respect of the significant digital presence shall be ~~those that the digital presence would have earned if it had been a separate and independent enterprise performing the same or similar activities under the same or similar conditi~~based on the consolidated profits of the group, where positive, to which the digital permanent establishment belongs, ~~in particular in its dealings with other parts of the enterprise, taking into account the functions performed, assets used and risks assumed, through a digital interface.~~as defined in the Proposals for a Council Directive on a Common Consolidated Corporate Tax Base;

Amendment 89 #

Proposal for a directive
Article 5 – paragraph 3

3. For the purposes of paragraph 2 the determination of profits attributable to or in respect of the significant digital presence shall be based on a functional analysis. In order to determine the functions of, and attribute the economic ownership of assets and risks to, the significant digital presence, the economically significant activities performed by such presence through a digital interface shall be taken into account. For this purpose, activities undertaken by the enterprise through a digital interface related to data or users shall be considered economically significant activities of the significant digital presence which attribute risks and the economic ownership of assets to such presence. For the purposes of the functional analysis, in determining the location of assets, risks and functions performed, the place of where the economic activity in relation to these factors takes place shall prevail over the location to which they are contractually assigned to.

Amendment 90 #

Proposal for a directive
Article 5 – paragraph 3

3. For the purposes of paragraph 2 the determination of profits attributable to or in respect of the significant digital presence in each tax year shall be based on a f~~unctional analysis. In order to determine the functions of, and attribute the economic ownership of assets and risks to, the significant digital presence,~~ormula for apportionment, in accordance with the Proposals for a Council Directive on a Common Corporate Tax Base and a Council Directive on Common Consolidated Corporate Tax Base, including the digital permanent establishment, as adopted in the legislative resolutions of the European Parliament of 15 March 2018. The formula shall fully reflect the economically significant activities performed by ~~such presence through a~~the digital ienter~~face shall be taken into account~~prise in each Member State. For this purpose, activities undertaken by the enterprise through a digital interface related to data or users shall be considered economically significant activities of the significant digital ~~presence which attribute risks and the economic ownership of assets to such~~ presence.

Amendment 91 #

Proposal for a directive
Article 5 – paragraph 5 – point a

(a) the collection, storage, processing, analysis, exploitation, transmission, deployment and sale of user-level data;

Amendment 92 #

Proposal for a directive
Article 5 – paragraph 6

6. In determining the attributable profits under paragraphs 1 to 4, taxpayers shall use the profit split method unless the taxpayer proves that an alternative method based on internationally accepted principles is more appropriate having regard to the results of the functional analysis. The splitting factors may include expenses incurred for research, development and marketing as well as the number of users and. The splitting factors shall include tangible assets, employee’s payroll, headcount, sales, data collected and users per Member State.

Amendment 93 #

Proposal for a directive
Article 5 – paragraph 6

Amendment 94 #

Proposal for a directive
Article 5 – paragraph 6

6. In determining the attributable profits under paragraphs 1 to 4 , taxpayers shall use the profit split method ~~unless the taxpayer proves that an alternative method based on internationally accepted principles is more appropriate having regard to the results of the functional analysis. Th~~on the basis of equally weighted factors, namely labour, assets, sales by destination and collection and use of personal data of online spl~~itting fact~~atforms ~~may include expen~~and services users ~~incurred for research, development and marketing as well as the number of users and data collected per Member State~~('data'), in accordance with the formula for apportionment of the tax base referred to in paragraph 3.

Amendment 95 #

Proposal for a directive
Article 5 – paragraph 6 a (new)

6a. Member States shall allocate adequate staff, expertise and budget resources to their national tax administrations as well as resources for the training of staff to be able to attribute profits to the permanent establishment and to reflect the digital activities in that Member State.

Amendment 96 #

Proposal for a directive
Article 5 a (new)

Article 5a Guidelines 1. By ... [the date of entry into force of this Directive] the Commission shall issue guidelines for tax authorities on how a significant digital presence and digital services are to be identified, measured and taxed. Those rules shall be harmonised across the whole Union and shall be issued in all the official languages of the Union. 2. Based on the guidelines referred to in the first paragraph, the Commission shall issue guidelines with a clear methodology for companies to self-assess whether and which of their activities are to be counted into the significant digital presence. Those guidelines shall be issued in all the official languages of the Union and shall be made available on the website of the Commission.

Amendment 97 #

Petr JEŽEK

Proposal for a directive
Article 5 a (new)

Article 5a Administrative cooperation In order to guarantee a uniform application of the Directive in the European Union, the exchange of information on tax matters shall be automatic and mandatory, as laid down by Council Directive 2011/16/EU.

Amendment 98 #