French consider local tax on digital sales in EU

France has plans to push for new EU regulations which would see online retailers being regulated and taxed in the countries where customers use their websites, reports chartered accountants Northampton Harris & Co.

The outline proposals are being put forward by Fleur Pellerin, France’s minister for the digital economy. In an interview with French newspaper Liberation she said Europe needed new regulatory powers to intervene much earlier, to level the playing field in the internet economy and allow the emergence of alternatives in Europe to US web giants such as Amazon or Google.

As part of this France is calling on the European Commission to draw up proposals by Spring 2014 aimed at ‘establishing a tax regime for digital companies that ensures that the profits they make on the European market are subject to taxation and that the revenues are shared between the member states, linking the tax base to the place where the profits are made". France would also like to see a revised EU VAT rate for certain online cultural goods and services.

The proposals will be discussed this week at an informal meeting likely to include ministers from the UK, Germany, Spain, Poland and other EU members as well as EU digital commissioner Neelie Kroes. Next month sees the formal EU summit on telecoms, which is set to examine the digital challenges facing the member states.

Changes to the tax regime could also be accompanied by new rules, for example, making digital property like e-books and user profiles portable between services, as well as tougher controls on data transfer outside Europe and internet privacy.

According to the Financial Times, Pellerin said the aim was ‘to make sure there is a level playing field for everyone, whether they"re European or not".

‘What we have in mind is to find the criteria to define the taxable basis that we can attach to European territory. When we talk to Google or Facebook or the others . . . of course, they are not happy about paying more corporate tax. But they are happy to agree to play by the rules. The thing that bothers them is uncertainty,’ Pellerin said.