Internet and taxation in European Union

Bernardi, Luigi (2015): Internet and taxation in European Union. Forthcoming in: Rivista di diritto finanziario e scienza delle finanze No. 2015/4

Abstract

The purpose of this paper is to offer a primer on certain important features and issues concerning Internet and taxation in the European Union. After a general introduction concerning the origins of the matter, the paper discusses why a tax on the huge profits made by the big US digital MNEs in Europe was not substantially reflected in the tax policy of EU members, notwithstanding the large tax gap among EU countries resulting from the shift in profits by the (US digital) MNE towards lower or no taxation countries. Then the main directives on Internet and taxation introduced by the EU (and also by the OECD) since the late 1990s are discussed: the EU especially focusses on establishing the due place of taxation on electronic commerce, while the OECD (more recently together with the G20) has placed the emphasis on regulating Transfer Prices and contrasting Base Erosion and Profits’ Shifting (BEPS).

• Item Type: MPRA Paper
• Language: English
• Keywords: Web Tax; E-commerce; Profits shifting, Europe; OECD
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H29 - Other

References

AGENZIA ITALIANA DELLE ENTRATE, 2013, Vat on e-service, il nuovo servizio dell’agenzia delle entrate, http://www.agenziaentrate.gov.it/wps/portal/entrate/home and http://www.e-services. Agenziaentrate. it/index.htm.

BASU, S., 2007, Global perspectives on e-commerce taxation law, Burlington, VT: Ashgate.

BBC NEWS EUROPE, 2014, Hungary Internet tax cancelled after mass protest, Oct. 31, http://www.bbc.com/news/world-europe-29846285.

BELLINAZZO, 2015, “Il fisco tratta con i grandi del web”, Il sole 24 ore, Feb. 26.

BERGIN, T., 2013, “Amazon criticized over low German tax bill”, Reuters, Jul. 12, http://www.reuters.com/article/2013/07/12/net-us-amazon-germany-tax-idUSBRE96B0HO2 0130712.

BIDGOLL, H., 2004, The Internet Encyclopedia, Hoboken, N.J.: Wiley, https://books.google.it/books?id=wshm3f0hyI8C&pg=PA419&lpg=PA419&dq=oecd+Internet+taxation&source=bl&ots=-hZnXgXVu-&sig=YU.

BOSI, P. AND GUERRA, M.C., 2014, I tributi nell’economia italiana, Bologna: ilMulino.

BRITISH GOVERNMENT-HMT, 2013, Reducing tax evasion and avoidance, Feb., ttps://www.gov.uk/government/policies/

BRONZO, E., 2015, “E-book, la Corte UE boccia l’IVA ridotta in Francia e Lussemburgo, rischia l’Italia”, Il Sole 24 ore, Mar. 5, http://www.ilsole24ore.com/art/norme-e-tributi/2015-03-05/e-book-corte-ue-boccia-iva-ridotta-francia-e-lu. CHIUSI, F., 2013, La webtax uscita dalla Commissione dopo le modifiche notturne, Dec. 18 from TwitLonger, https://twitter.com/fabiochiusi/status/413235160977379328. De Biase, L. 2015, “Google, pronta la maxi-multa Ue” Il sole 24 ore, Apr. 3.

DONERO, J., 2014, “Spain passed an insane law taxing Google for linking to news”, Business Insider, Jul. 29, http://www.businessinsider.com/spain-google-tax-2014-7?IR=T.

EUNEWS, 2013, Perché la Web Tax italiana spaventa i big americani dell’high-tech e… l’Europa? Nov. 18, http://www.eunews.it/2013/11/18/perche-la-web-tax-italiana-spaventa-i-big-americani-dellhigh-tech-e-leuropa/10628.

EU COMMISSION, 1996, The BIT TAX: the case for a further research, http://cordis.europa.eu/news/rcn/6988_it.html.

EU COMMISSION, 1998, Interim report on the implications of electronic commerce for VAT and Custom,http://ec.europa.eu/taxation_customs/resources/documents/interimreportonelectronic_ commerce_en.pdf.

EU COMMISSION, 2015a, Memo on Telecommunications, broadcasting & electronic services, Mar. 18, http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/telecom/index_en.htm.

EU COMMISSION, 2015b, A Digital Single Market for Europe: Commission sets out 16 initiatives to make it happen, Brussels: The EU Commission, June 06, http://ec.europa.eu/priorities/digital-single-market/ . EU COUNCIL, 2002, Directive2002/38/EC, http://eur-lex.europa.eu/LexUriServ/LexUriServ. do?uri=OJ: L:2002:128:0041:0044:en:PDF.

EU COUNCIL2006, Directive2006/58/EC, http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32006L0058 . EU COUNCIL, 2008, Directive 2008/8/EC, https://www.google.it/?gws_rd=ssl#hl= it&source=hp&q=Council+Directive+2008%2F8%2FEC&aq=f&aqi=g10&aql=&oq=&gs_rfai=&fp=9fca69c98b5d77d7.

EU COUNCIL, 2008, Regulation on administrative cooperation, https://www.google.it/search? q=Regulation+on+ administrative +co-operation+143/&gws rd =cr&ei=b38RVY jHO8zkU ba8g8AI.

GAMBARO, M. AND PUGLISI, R., 2013, “ La web tax secondo il Governo Letta”, lavoce.info, Dec. 20,http://www.lavoce.info/archives/15902/webtax-agenda-digitale-libri-ebook/. GOOLSBEE, A. AND ZITTRAIN, J. 1999, Evaluating the costs and benefits of taxing internet commerce,http://govinfo.library.unt.edu/ecommerce/document/goolsbee13.pdf.

GORDON-MURMANE, L., 2000, “E-Commerce and Internet Taxation: Issues, Organizations, and Findings”, Searcher, June,http://www.infotoday.com/searcher/jun00/gordon-murnane.htm.

IOZZIA, G., 2015, “Webtax, ecco come andare oltre”, Corriere delle Comunicazioni, Mar. 18,http: // www.brunoleoni.it/nextpage.aspx?codice=14994.

MCLURE, CE, JR, 1996-97, “Taxation of electronic commerce: “Economic objectives, technological constraints and tax law”, Tax Law Review 52,http://www.egov.ufsc.br/portal/sites/default/files/anexos/20477-20478-1-PB.pdf

MCLURE, C.E.JR., 2002, Taxation of Electronic Commerce in the European Union, Hoover Institute, Standford University,http://citeseerx.ist.psu.edu/viewdoc/download?doi= 10.1.1.95.5517 &rep=rep1&type=pdf

MAYER, D., 2013, “German Parliament passes “Google tax” law, forcing royalty payments for news snippets”, Gigaon, Mar. 1, https://gigaom.com/2013/03/01/german-parliament-passes-google-tax-law-forcing-royalty-payments-for-news-snippets/.

MAMELI, G., 2013, “WebTax: come ti calpesto il diritto UE”, Leggioggi.it, D.C. 8. http://www.leggioggi.it/2013/12/19/webtax-come-ti-calpesto-il-dirittoUE.

MACKIE-MASON, J., SHENKER, S. AND VARIAN, H.L., 1996, “Service architecture and content provision: The network provider as editor”, National Science Foundation: 1996.

NIEDDU, F., 2014, “Web Tax, miserie italiane”, Globalzine, May 22. http://www.localtoglobal.it/web-tax-miserie-italiane.

OECD, 2005, E-commerce: transfer pricing and business profits taxation, https:///books/reader?id=cYDVAgAAQBAJ&printsec=frontcover&output=reader&hl=it&pg=GBS.PP1.

OECD, 1998, Electronic commerce: taxation framework conditions, http://www. oecd.org/tax/consumption/1923256.pdf.

OECD, 2010, OECD transfer pricing guidelines for multinational enterprises and tax administration, http://www.oecd-ilibrary.org/oecd-transfer-pricing-guidelines-for-multinational-enterprises-and-tax-administrations-2010.

OECD, 2013, OECD Internet Outlook 2012, https://books.google.it/books?id= X4HwP7eA7wQC&pg=PA119&dq=Norvey+Internet+taxation&hl=it&sa=X&ei=D93dVPatEIOzUdqJgtAP&ved=0CFIQ6AEwBQ#v=onepage&q=Norvey%20Internet%20taxation&f=false

OECD, 2015, BEPS Action 11: improving the analysis of BEPS,http://www.oecd.org/tax/tax-policy/public-comments-beps-action-11-data-analysis.pdf.

OECD/G20, 2013, Addressing base erosion and profits shifting, Digital-Asset-Management/oecd/taxation/addressing-base-erosion-and-profit-shifting_9789264192744-en . OECD/G20, 2014a, Base erosion and profits shifting, http://www. oecd.org/ctp/beps.htm.

OECD/G20, 2014b, Explanatory Statement, http://www.oecd.org/tax/beps-2014-deliverables-explanatory-statement.pdf. OECD/G20, 2014c Addressing the Tax Challenges of the Digital Economy, http://www.oecd -ilibrary.org/docserver/download/2314251e.pdf?

OECD/G20, 2015, First step toward implementation of OECD/G20efforts again tax avoidance by the multinationals, http://www.oecd.org/newsroom/first-steps-towards-implementation-of-oecd-g20-efforts-against-tax-avoidance-by-multinationals.htm.

PENNISI, M., 2014, “L’iter finite della web tax”, Webnews, Mar 07, www.webnews. it/2014/03/07/decreto-anti-webtax-renzi/. Pezzi, A., 2013, “Perché ci serve la Web tax”, Wired, Dec. ,http://www.wired.it/Internet/web/2013/12/17/perche-serve-webtax /. PFANNER, E., 2013, “France proposes an Internet tax”, The New York Times, Jan. 20, http://www.nytimes. com/2013/01/21/business/global/21iht-datatax21.html?_r=1.

PUGLISI, R., 2014, “Chi ha paura di Google News?”, lavoce.info, Dec. 29, http://www.lavoce.info/archives/32025/paura-google-news/

ROBINSON, F., 2015, “EU considers taxing Google, other Internet firms”, Wall Street Journal, Jan. 19, http://www.wsj.com/articles/eu-considers-taxing-google-other-u-s-internet-firms-1421699055.

ROTONDO, M., 2015, “Le norme OCSE in arrivo spingono i big al dialogo”, Il Sole 24 ore, Feb. 26.

SOETE, L., 1996, La Bit Tax, mimeo, http://www.telelavoro.rassegna.it/bittax.htm.

SOETE, L. 1999, “The Bit Tax: the case of further research”, Market.com, Dic. 26, • http://web.tiscali.it/ivm/spazio/bittax.html.

TREMOLADA, L, 2015, “ Più vicina la pace tra Fisco e Google”, Il sole 24 ore, Apr. 15.

VIVIANI, M., 2014a, “Matteo Renzi rimuove la Web Tax”, Webnews, Feb. 28, http://www.webnews.it/2014/02/28/matteo-renzi-rimuove-webtax.

VIVIANI, M., 2014b, “La nuova Iva europea non è la webtax, però……” Webnews, Dec. 18, http://www.webnews.it/2014/12/18/nuova-iva-europea-startup/.

YAHOO NEWS, 2012, “Germany, UK propose e-commerce tax effort”, Nov. 05, https://www.google.it/search?q=(http%3A%2F%2Fnews.yahoo.com%2Fgermany-uk-propose-e-commerce-tax-effort-181817050.html8.