EU confident of digital tax despite Irish objections

EU member states are likely to reach a political agreement by the end of the year to implement the new digital sales tax, according to Valère Moutarlier, the head of the European Commission’s tax directorate.

The measure has been opposed by Ireland, along with a number of other smaller member states, but the comments by Mr Moutarlier – in Dublin for a commission seminar on fair taxation – show that there is a strong push to get it agreed.

The digital sales tax, which would be a levy on the sale of some of the digital activities of major firms, is designed as an interim measure, ahead of final agreement on how the sector should be taxed. It would cost the Irish exchequer, as big firms would pay more tax in markets where they had most users of their digital platforms. As well as Ireland, the idea has raised concerns in the Nordic countries and in Luxembourg.

Mr Moutarlier, the director for the commission’s directorate general for taxation, told The Irish Times that he believes “the momentum is there to have a political agreement by the end of the year”. The Austrian EU presidency is trying to broker a deal, proposing a time limit on the tax and tweaking its scope.

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He said the “jury was still out” on Ireland’s attitude, but that, if the tax was not agreed at EU level, individual member states would proceed on their own. Ireland could at least have a say in the design and implementation of the EU measure, he said.

Interim measure

Mr Moutarlier said the commission was confident of its structure and that there was no technical issue in relation to the tax which was not solvable. It is designed as an interim measure and the commission has also proposed longer-term plans for the taxation of the sector.

Ireland has so far preferred to support the tax plans put forward by the OECD under the BEPS process. However, there has been frustration in some European capitals at the pace of the OECD process, in particular in relation to digital taxation. This, together with the political controversy over the low tax payments of many major multinationals, has led to the EU coming forward with its own plans.