J’ai participé ce matin à une conférence sur taxe à Tallinn sur le thème “Droit fiscal européen: vers un concept d’établissement virtuel permanent”

Let me first congratulate the Estonian Presidency for this tax conference and thank it for inviting one of the MEPs in charge of the dossier to make a short presentation.

Let me add that, on to-day’s issue, Estonia is particularly well placed to take the lead and to be seen as a key reference. For one thing, this country has been pioneering all the dimensions of digitalization, well ahead of its European partners and the rest of the world. And for another feature: while in western Europe the principles of our tax systems date back in the previous century – the French income tax was devised before the first World War and the business tax immediately after the second -, Estonia’s tax regime is a teen-ager. It is suited to the modern economy, which is no longer the case in older democracies.

Last June, my co-rapporteur Paul Tang and myself, came to Tallinn to take stock of the various procedures under way in the EU and OECD over cross border business taxation. We were struck by the blunt comment of the Finance ministry about the CCCTB project: ‘We don’t take great interest in this project, except if it is an opportunity to open the debate on taxing digital economy.’

What is EP’s approach?

For EP and EC the starting point was the major tax scandals: offshore leaks, luxleaks, Panama papers. Under the pressure of the media and public opinions, the European institutions engaged in the adoption of a comprehensive package to put an end to aggressive and shameful tax planning by a lot of MNLs encouraged by the law and administrative practices of many member states. For the EU the stake was tax justice in two dimensions: justice among tax-payers, particularly between large groups and SMEs. And equity among MSs: evidence appeared that some of them managed to steal tax assets from their neighbors, which is unacceptable in our community of nations. We have been working in close relationship with OECD, whose BEPS action plan was a key roadmap.

Beyond tax fairness, a second aim was to harmonize, simplify and update our national business tax systems into one single European framework. It is the CCCTB project. Do not underestimate the political extent and will behind that project. In the long run, one single market needs one single business taxation. At least one single tax base. It has been the case for the VAT for forty years, now is the time to agree on the same definition of taxable profit. Tax competition can and should continue among us, but through the rates, and along the same principles that govern European competition in all other fields: transparency, loyalty, fairness, while so far tax competition within the European family has been obscure, unfair and disloyal. Contrary to some MSs, but in line with Business Europe’s position, we definitely insist on the necessity of a simultaneous entry into force of both directives, meaning that of the consolidation at EU level at the same time of the common definition of taxable profit. Personally, I strongly recommend the full application of the European tax law to all enterprises, whatever their size, to avoid new sources of complexity and inequality. If the new system means progress, why deprive the SMS of it? If it is detrimental, why would we harm our biggest champions? Let us apply it to everyone or to no-one.   

Last but not least, more than OECD, more than EC, Parliament is adamant that this opportunity has to be taken up to start tackling the digital economy taxing issue, especially taxation of digital platforms. Therefore, CCCTB is a unique opportunity to deal with it.


1 – We are not convinced by the case that, when all is said and done, the digital economy would not be as different as it seems of the old brick and mortar industry. Nor by the possibility to reach intangibles through their tangible results in the books. If that was the case, the GAFAS would pay much higher taxes in my home state.

2 – The first approach to be tried is finding a relevant criteria enabling to link the profits of digital platforms to their true geographical origins. We propose to complement the old concept of permanent establishment by the digital presence.A company with digital presence collecting or exploiting personal data from online platforms and service users for commercial purposes is considered to be resident in the MS where the user from whom it collects and exploits personal data from is a resident.’

Subsequently, it is proposed to complement the three apportionment criteria – sales, labor and assets – by a fourth one, data. The data factor could consist of the total volume of personal data online platform and services users collected and exploited per MS by a member of the business group in proportion to the total volume collected and exploited by the whole group. The definition of data collection and exploitation should be derived from the one already laid down in the EU regulation 2016/679 on personal data protection.

3 – We are open to other definitions, as well as other approaches. It is said that the French government could make suggestions as early as next week informal Ecofin council. No non-paper has been circulated yet, but it is hinted that instead of the income tax, the way of a sales tax, with a definition of sales fitting the special case of digital services, could be recommended.

You can be sure that, whatever the technicalities, the EP will support any solution aiming at making corporate tax fairer for countries and enterprises, more transparent, fully compatible with to-day’s economy. Without forgetting the requirement of ensuring that a new system initiated in Europe should be acceptable by, and possibly extended to, our key partners worldwide.