The European Economic and Social Committee (EESC) urges EU Member States to intensify their coordination on tax matters at European and international level with a view to the digital and collaborative economy. A closer coordination of tax policies applicable to the new economic sector and devising instruments and working solutions could improve tax compliance, assure fair competition and tap the full potential of this new economic sector.
While the EESC welcomes the existing cooperation of the European Commission, the EU Member States and the OECD/G20 on this issue, it encourages the Member States, in an opinion that was adopted by the EESC plenary on 15 July 2020, to find solutions at EU level if international agreement is not reached as planned by the end of 2020 and cannot be expected in the foreseeable future. The Committee proposed clear and harmonised reporting obligations for digital and collaborative businesses and a functional and proportionate system for collecting and exchanging data at EU level if international agreement is lagging behind.
At the EESC plenary session, the rapporteur of the opinion, Ester Vitale, drew special attention to the urgent need for action.
Taxation and tax policies must adapt to the constant developments in the collaborative economy. International, European and national institutions must act effectively and rapidly in order to deal with the challenges it poses. A solution should, preferably, be found at international or even global level, Ms Vitale said and specified that
current tax rules and models must be adapted to the new business environment.
In its opinion, the Committee states that adapted tax rules geared to the various sectors of the collaborative economy should be in line with the principles of fair taxation and address the reporting obligations applicable to the collaborative economy.
The EESC suggests that a European standard for collecting data and information on transactions that digital platforms have to share with their national tax authorities and keep for documentary reasons be developed.
Rapporteur Ester Vitale said:
Reporting obligations should be clear and harmonised across the Member States, but they should not constitute an excessive administrative burden for digital platforms. Introducing standard and simplified reporting obligations with reasonable compliance costs could be an incentive for digital platforms to comply with the rules.
A European standard could also limit counterproductive unilateral action by Member States, which creates uncertainty as to which rules apply in the internal market and can lead to excessive compliance costs, operational difficulties and inefficiency for the whole collaborative economy.
In any case, tax rules relevant to the collaborative economy, including the rules on reporting requirements, should constantly adapt to the various sectors and often differing activities of that economy.
National tax authorities should, in the Committee's view, share collected information with the help of a functional and proportionate system for collecting and exchanging data. The objective of such a system would be to set up effective forms of cooperation intended to prevent fraud and tax avoidance as well as to harmonise the working practices of the various authorities. This could not only make the work of tax authorities easier, but also establish a reliable and predictable system for businesses, which could finally improve compliance, assure fair competition in the sector and with other sectors and tap the full potential of this new economic sector.
The exchange of information between private parties and public authorities should, naturally, comply with European legislation on the protection of privacy and the processing of individuals' personal data and meet the criteria of need, proportionality and strict interpretation of any waivers granted.
Lastly, it should also be considered whether the imminent implementation of the directive on certain requirements for payment service providers regarding VAT fraud could also be used, in the context of reporting obligations, for the purposes of direct taxation.