Timeline - Digital taxation

The Council today formally adopted new value added tax (VAT) rules for distance sales of imported goods.

The directive will improve collection of VAT on imported goods by ensuring suppliers are always liable for VAT paid on imports, rather than the EU consumer as is currently usual practice. This should encourage suppliers outside the EU to use the VAT import one-stop-shop (IOSS) for VAT reporting and collection.

• VAT: Council formally adopts new rules simplifying tax collection for imports (press release, 18 July 2025)

On 13 May 2025, the Council reached agreement on the position of member states on the directive on value added tax (VAT) rules for distance sales of imported goods and import VAT.

The directive seeks to improve the collection of VAT on imported goods by making suppliers liable for the VAT paid on imports, which is likely to encourage them to use the VAT import one-stop-shop (IOSS).

• VAT rules: Council agrees position on directive simplifying tax collection for imports (press release, 13 May 2025)

The Council adopted the new DAC9 directive, strengthening cooperation and information exchange between tax authorities on minimum effective corporate taxation. The new rules will:

• make it easier for multinational enterprise groups and large-scale domestic groups to meet their filing obligations under the Pillar 2 directive implementing the G20/OECD global agreement on international tax reform
• simplify reporting for large corporations, enhance data exchange between tax authorities and align with global minimum taxation standards
• boost transparency between member states
• ensure that the largest multinational and domestic groups, or companies with a combined annual turnover of at least €750 million, are taxed at a minimum effective rate of 15%

Member states will need to implement DAC9 by 31 December 2025.

• Council adopts rules to extend cooperation and information exchange between tax authorities to minimum effective corporate taxation (press release, 14 April 2025)

The Council reached a political agreement today on a new EU directive (DAC9) that will improve administrative cooperation in the field of taxation.

The objective of this legislation is to enhance cooperation and information exchange on minimum effective corporate taxation in order to make it easier for multinational enterprise groups and large-scale domestic groups to fulfil their filing obligations under the Pillar 2 directive, which implements the G20/OECD global agreement.

• Council agrees to enhance cooperation and information exchange on minimum effective corporate taxation (press release, 11 March 2025)

On 11 March 2025, the Council gave its final approval to a set of laws which will bring the EU’s value added tax (VAT) rules into the digital age.

The new rules will:

• fully digitalise, by 2030, VAT reporting obligations for companies that sell goods and services to businesses in another EU member state
• require online platforms to pay VAT on short-term accommodation and passenger transport services in most cases where individual service providers do not charge VAT
• improve and expand online VAT one-stop shops so that businesses do not have to register for VAT in every member state in which they do business

• Taxation: Council adopts VAT in the digital age package (press release, 11 March 2025)
• Value added tax (VAT) in the EU

The Council today reached a political agreement on a new directive paving the way for the introduction of an electronic tax certificate for VAT exemptions.

The directive will provide for an electronic certificate to replace the existing paper certificate that is used when goods are to be exempt from VAT, for example because they are imported for embassies, international organisations or armed forces.

• Taxation: Council introduces electronic VAT exemption certificate (press release, 10 December 2024)

The Council reached an agreement on new measures that will make the EU's value added tax VAT rules fit for the digital age.

The new rules will:

• make VAT reporting obligations for cross-border transactions fully digital by 2030
• require online platforms to pay VAT on short-term accommodation and passenger transport services in most cases where individual service providers are exempt
• improve the online VAT one-stop shop system 

• Taxation: Council agrees on VAT in the digital age package (press release, 5 November 2024)

The Council adopted a directive amending EU rules on administrative cooperation in the area of taxation (DAC8). The changes mainly concern:

• the reporting and automatic exchange of information on revenues from transactions in crypto-assets
• information on advance tax rulings for the wealthiest (high-net-worth) individuals

With this directive, the EU aims to strengthen the existing legislative framework by improving the overall administrative cooperation of tax administrations and enlarging the scope of registration and reporting obligations.

The new rules will cover additional categories of assets and income, such as crypto-assets.

• Council adopts directive to boost cooperation between national taxation authorities (DAC8) (press release, 17 October 2023)

The Council reached agreement on its position on a set of amendments to the directive on administrative cooperation in the field of taxation (DAC). The updates mainly concern the reporting and automatic exchange of information on revenues from transactions in crypto-assets and information on advance tax rulings for the wealthiest (high-net-worth) individuals.

The aim is to strengthen the existing legislative framework by enlarging the scope for registration and reporting obligations and the overall administrative cooperation between tax administrations.

• Cooperation between national tax authorities: Council puts the spotlight on crypto-assets and the wealthiest individuals (press release, 16 May 2023)

The Council adopted a directive to implement at EU level the minimum taxation component, known as Pillar 2, of the OECD’s reform of international taxation.

The profit of the large multinational and domestic groups or companies with a combined annual turnover of at least €750 million will be taxed at a minimum rate of 15%.

The new rules will:

• reduce the risk of tax base erosion and profit shifting
• ensure that the largest multinational groups pay the agreed global minimum rate of corporate tax

• International taxation: Council adopts rules on minimum level of taxation for largest corporations (press release, 12 December 2022)

To make international trade easier, shorten customs clearance times and reduce the risk of fraud, the EU decided to create a single window for customs. 

The new rules set the appropriate conditions for digital collaboration between customs and partner competent authorities. Once fully implemented, businesses will no longer have to submit documents to several authorities through different portals.

The new rules are expected to boost the smooth flow of cross-border trade and will help reduce the administrative burden for traders, particularly by saving time and making clearance simpler and more automated.

• Council adopted EU single window for customs (press release, 24 October 2022)

The Council and the European Parliament reached a provisional agreement on a single window for customs which sets the appropriate conditions for digital collaboration between customs and partner competent authorities. The aim is to make international trade easier, shorten customs clearance times and reduce the risk of fraud. It will also help reduce the administrative burden for traders.

Efficient customs clearance and controls are essential to allow trade to flow smoothly while also protecting EU citizens, businesses and the environment. Once fully implemented, businesses will no longer have to submit documents to several authorities through different portals. The single window environment will allow customs and other authorities to automatically verify that the goods in question comply with EU requirements and that the necessary formalities have been completed.

• Customs: Provisional agreement reached on EU single window which will make customs clearance easier and faster (press release, 19 May 2022)

New VAT rules for online shopping came into force on 1 July 2021 as part of efforts to ensure a more level playing field for all businesses. The Council adopted conclusions on the implementation of the VAT e-commerce package.

In the conclusions the Council highlights how further clarifying and simplifying the VAT rules for businesses would strengthen the European Single Market and help European businesses to compete in domestic and global markets, as well as help fight against tax fraud.

• Council adopted conclusions on the implementation of the VAT e-commerce package (press release, 15 March 2022)

EU leaders reiterated their commitment to reaching a consensus-based global solution on international digital taxation within the framework of the OECD by mid-2021. They confirmed, however, that the EU would be ready to move forward if the prospect of a global solution was not forthcoming.

In that context, the leaders also referred to the Commission's upcoming proposal on a digital levy, with a view to it being introduced by 1 January 2023 at the latest.

• Statement of the members of the European Council, 25 March 2021

The Council adopted amendments to the directive on administrative cooperation in the field of taxation to address the challenges posed by the digital platform economy. Digital platform operators will be obliged to report the income earned by sellers on their platforms and member states will automatically exchange this information.

The new rules cover digital platforms located both inside and outside the EU and help ensure sellers pay their fair share of tax. The rules will apply from 1 January 2023 onwards.

• Taxation: Council adopts new rules to strengthen administrative cooperation and include sales through digital platforms (press release, 22 March 2021)

Ahead of the European Council meeting of 25-26 March during which EU leaders are expected to discuss tax challenges arising from the digital economy, finance ministers exchanged views on the topic. They confirmed their support for the ongoing OECD negotiations. They also stressed their readiness to examine possible solutions at EU level, should there be no prospect for progress in the G20/OECD format.

The Commission confirmed that, in the context of the ongoing discussion on EU own resources, it is considering putting forward a proposal for a specific digital levy without prejudice to the corporate tax rules that are being negotiated in the OECD.

• Informal video conference of economic and finance ministers, 16 March 2021

Finance ministers highlighted the importance of fair and effective taxation for a sustainable recovery from the COVID-19 crisis. They also welcomed the progress on an international corporate taxation system that was made by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

• Council conclusions on fair and effective taxation in times of recovery, on tax challenges linked to digitalisation and on tax good governance in the EU and beyond

The European Council considers the digital economy as a potential source of income for the EU budget and tasked the Commission with putting forward a proposal on a digital levy in the first semester of 2021. It also invited the Commission to take the ongoing OECD Inclusive Framework on BEPS negotiations into account.

• European Council conclusions, 17-21 July 2020

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) that brings together approximately 140 countries and jurisdictions decided to continue a two-pillar negotiation to address tax challenges related to the digitalised economy.

• Statement by the OECD/G20 Inclusive Framework on BEPS on the Two-Pillar Approach to Address the Tax Challenges Arising from the Digitalisation of the Economy (OECD)

Finance ministers exchanged views on tax challenges arising from digitalisation.

In view of an OECD meeting on 29-30 January 2020, ministers took stock of the progress achieved on the two pillars of the negotiations:

• reallocation of profits of digitalised businesses (pillar 1)
• general reform of international corporate taxation (pillar 2)

• Economic and Financial Affairs Council, 21 January 2020
• International community renews commitment to multilateral efforts to address tax challenges from digitalisation of the economy (OECD, press release, 31 January 2020)

Finance ministers took stock of the work on OECD negotiations carried out under the Finnish presidency. The discussion showed that there was support for the presidency's proposed way forward.

The aim announced by the OECD in May 2019 is to have:

• a political agreement on the architecture for digital taxation reforms by January 2020
• a final report by the end of 2020 

• Economic and Financial Affairs Council, 8 November 2019

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) adopted a work programme the aim of which is to reach a new global agreement on the taxation of multinational enterprises.

• International community agrees on a roadmap for resolving the tax challenges arising from digitalisation of the economy (press release, 31 May 2019, OECD)

Ministers discussed current international tax reforms, with a view to preparing for upcoming OECD and G20 debates.

• Economic and Financial Affairs Council, 17 May 2019

The Council took note of the progress achieved in the negotiations on the digital services tax on the basis of a new compromise text limited in scope to digital advertising services. The issue was last discussed at the Council meeting in December 2018.

It was agreed that the Council presidency would work on the EU position in international discussions on digital tax, in particular in view of the OECD's report, due by mid-2020.

• Compromise text - Proposal for a Council Directive on the common system of a digital advertising tax on revenues resulting from the provision of digital advertising services, March 2019
• Economic and Financial Affairs Council, 12 March 2019

Ministers exchanged views on the digital services tax on the basis of a presidency compromise text. It was agreed that discussions would continue at technical level. Representatives at technical level were invited to explore whether a narrower scope could be accepted by delegations.

• Economic and Financial Affairs Council, 4 December 2018

Ministers held a policy debate on the proposal to establish a digital services tax. The discussion focused on two key issues of the Commission proposal: the scope of taxable services and the question of the expiry of the directive - the so-called sunset clause.

On the sunset clause, all member states agreed that the directive should expire once there was a comprehensive solution to taxing the digital economy at OECD level.

On the scope, most member states supported the scope proposed by the Commission.

• Economic and Financial Affairs Council, 6 November 2018

Following the presentation of the digital taxation package by the European Commission and an exchange of views by member states, the Council presidency set out a roadmap on the way forward regarding work on digital taxation. 

EU leaders held a debate on taxation, in particular taxation in the digital economy. They focused on:

• how to adapt taxation systems, while taking into account the growing digital economy
• what more should be done to fight tax evasion and tax avoidance
• how best to ensure synergies at EU and international level 

• Leaders' Agenda note on taxation
• European Council meeting, 22 and 23 March 2018

The Commission made two legislative proposals:

1. The first initiative aims to reform corporate tax rules so that profits are registered and taxed where businesses have significant interaction with users through digital channels. This forms the Commission's preferred long-term solution.
    
2. The second proposal responds to calls from several member states for an interim tax which covers the main digital activities that currently escape tax altogether in the EU.

• Video: Do digital activities need to be taxed?

• Interim report by the OECD on digital taxation

The Council discussed its approach to the taxation of profits in the digital economy. The conclusions would also serve as a reference for further work on the subject at EU level.

In its conclusions, the Council highlighted the urgency of agreeing on a policy response at international level. It called for close cooperation with the OECD and other international partners. The Council suggested that the concept of 'virtual permanent establishment' be explored, together with amendments to the rules on transfer pricing and profit attribution.

• Council conclusions on digital taxation

In their conclusions, EU leaders called for an "effective and fair taxation system fit for the digital era". 

It is important to ensure that all companies pay their fair share of taxes and to ensure a global level-playing field in line with the work currently underway at the OECD.

• European Council conclusions, 19 and 20 October 2017
• European Council, 19 and 20 October 2017

The Council presidency organised the Tallinn Digital Summit in cooperation with the President of the European Council and with the European Commission. The summit brought together EU heads of state or government.

The aim of the summit was to serve as a platform for launching high-level discussions on plans for digital innovation to enable the European Union to:

• stay ahead of the technological curve
• be a digital leader globally in the years to come

• Video highlights of the Tallinn Digital Summit