Legislative Proposal on EU Rules on Digital Economy Taxation Likely in March 2018

EU List of Non-cooperative tax jurisdictions

The European Commission is likely to table a legislative proposal on EU rules on taxation of profits of multinational corporations in the digital economy by March 2018.

In a note sent to the EU Council’s High Level Working Party on Tax Issues on January 30, 2018, the Bulgarian Presidency stated that it intends to start the technical examination of the legislative proposal.

Addressing the international tax challenges posed by the digital economy has been a subject matter of intense debate in the EU in recent years. After the informal ECOFIN meeting in Tallinn, Estonia, on September 21, 2017, the Commission launched a new EU agenda to tax the digital economy in a fair and growth-friendly way, as confirmed by President Jean-Claude Juncker in the 2017 State of the Union.

In December 2017, the Council adopted conclusions on the taxation of profits in the digital economy, which would serve as guidance for future work at EU-level.

Other areas of work

The January 30 note states that the Bulgarian Presidency will undertake follow-up work on the EU list of non-cooperative jurisdictions for tax purposes. Work in this area will include updating the list (Annex I of the Council conclusions) based on new commitments, monitoring the implementation of the commitments received (Annex II) and agreeing on procedures to carry out this monitoring process, and exploring further coordinated defensive measures.

The Bulgarian Presidency will also explore how to take forward the proposal to modify the Interest and Royalty Directive by inserting an anti-abuse provision similar to the one in the Parent-Subsidiary Directive.

Finally, the note states that the Bulgarian Presidency will aim at reaching agreement during the coming months on key EU-BEPS work items, including mandatory disclosure rules and implementation of the Council conclusions on the Future of the Code of Conduct (Business Taxation).