December 5, 2023

Quite a few European firms elevate their voices in opposition to the implementation of the tax on sure digital providers –IDSD–, in a letter addressed to Maria Jesus Montero, Minister of Finance and Public Operate of the Authorities of Spain, and their European counterparts.

Within the letter, signed by vital firms equivalent to Spotify, Simply Eat, Glovo or Zalandoamongst others, requires that “unilateral discriminatory measures, such because the IDSD, be put to an finish.”

Behind this sort of tax, for instance, Apple has justified the rise of a 3% fee in subscriptions and inside funds in its utility retailer, the App Retailer, which undoubtedly impacts the tip person.

To grasp what European firms are asking for on this open letter, we should return to the approval of various tax modifications within the area of the digital economic system, proposed by the OECD.

Among the many key elements of what’s often known as the First Pillar, which might finish its utility this identical month of July, are: attaining a web taxable base; remove double taxation, and obtain international tax safety.

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This settlement —which has its second section with the applying of the Second Pillar— was authorised in October 2021 by 137 international locations and jurisdictions throughout the OECD’s Inclusive Framework on BEPS, endorsed by the G-20.

Thus, the Second Pillar brings with it a world minimal tax fee for company tax of 15%which applies to multinational firms whose revenue exceeds 750 million euros.

In keeping with calculations, with an extra assortment of 150,000 million {dollars} worldwide.

The signatory firms of this letter suggest that the settlement reached be prolonged till the applying of the First Pillar, past December 31, 2023.

“We encourage all governments that at the moment gather taxes underneath the present ones to cease doing so instantly if an settlement is reached in July,” they proceed.

Criticism of the IDSD: it’s disproportionate and may result in ‘industrial tensions’

Criticism of the IDSD from these main European know-how firms goes by means of placing an finish to “discriminatory unilateral tax measures”.

As they refer, the IDSD disproportionately impacts European know-how firms and supposes “substantial injury” to financial development, funding, innovation and employment.

“European know-how firms are disproportionately affected by the IDSD, which prevents their growth and hampers their capability to compete successfully with their international counterparts,” they denounce.

To start with, IDSD doesn’t tax advantages, however gross revenueand applies whatever the firm’s profitability, a “degree enjoying area” for European firms.

Second, though the First Pillar seeks keep away from double taxationthe IDSD causes the existence of a multi-layer taxation, because it doesn’t have mechanisms to compensate with different related taxes.

To this have to be added This tax on digital providers is accounted for as a cost that impacts working revenue –EBITDA–which has a better impression on firms that use this methodology to point efficiency.

Final however not least, the signatory firms state that this tax “provides rise to commerce tensions and could set off retaliatory measures by different international locations“.

“These actions can embody antagonistic and arbitrary taxes on the turnover or native operations of international firms in these international locations, which additional impacts the power of firms to develop and compete on a degree enjoying area,” they add.

For now, we should wait to search out out about Europe’s subsequent strikes on this matter and if, with this open letter, it decides to rethink a tax that has not been extremely popular.

These are the European firms which have signed the letter: Adevinta, AirHElp, Allegro,, Catawiki, Criteo, Supply Hero, Glovo, Simply Eat, Schibsted, Spotify, Trustpilot, Vinted, Wolt and Zalando.