Reply to post: Re: Beware of False Profits

European nations told to sort out 'digital tax' on tech giants by end of year

anothercynic Silver badge

Re: Beware of False Profits

The point of this digital revenue tax is that it'll be the revenue inside the EU that will be taxable at 3%, *not* profit, regardless of whether it slips into a Double Dutch Irish sandwich or not. That's why Luxembourg and Ireland are dead-set against it. They know they'll have a lot of their 'digital giants' possibly moving to the Channel Islands (as a certain tech giant has already investigated and done) or elsewhere in the bloc where the tax (levy, whatever you wanna call it) won't apply. Except, the way I understand it, if it's sold into the EU (regardless of where you're headquartered), it will be subject to this levy.

But like others have pointed out, it makes the attractive DDI tax efficiency mechanism not so attractive anymore. Not for digital revenues anyway (like Amazon's AWS services, Apple's iTunes and Apple Music, Google and Facebook's ad income). Of course, the cat-and-mouse game of what's digital revenue will start, and the whole cycle will go around again... *sigh*

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