European Concerns over International Taxation on Cross-border Sales

Ecommerce Europe wrote to the Organisation for Economic Cooperation and Development (OECD) in July to voice concerns on the potential instability of the international taxation once the present rules lapse at the end of the year. The OECD has lead on cross-border taxation for ecommerce and Ecommerce Europe has asked that the OECD G20 Inclusive Framework includes an extension of the current Pillar One’s moratorium on the publication of unilateral Digital Services Taxes (DSTs). The moratorium is a temporary solution proposed by the OECD in 2022 on international taxation which aims to ensure fairness and stability in the global tax framework. The moratorium is however due to terminate in December 2023 and to be replaced by a more permanent agreement on Pillar One, however, that still needs an international endorsement.

In this context of uncertainty, the discussion of unilateral measures tackling digital services is gaining ground in some countries. The introduction of DSTs or similar measures risks hindering the work of the Two-Pillar agreement and creating instability and legal uncertainty in the international tax system. Furthermore, at EU level, while Pillar Two has been already proposed by the European Commission and approved by the Member States, Pillar One has not yet been converted into a legislative proposal, which causes further uncertainty.