What European OECD Countries Are Doing about Digital Services Taxes



Elke Asen | The Tax Foundation

Over the last few years, concerns have been raised that the existing international tax system does not properly capture the digitalization of the economy. Under current international tax rules, multinationals generally pay corporate income tax where production occurs rather than where consumers or, specifically for the digital sector, users are located. However, some argue that through the digital economy, businesses (implicitly) derive income from users abroad, but, without a physical presence, are not subject to corporate income tax in that foreign country.

To address these concerns, the Organisation for Economic Co-operation and Development (OECD) has been hosting negotiations with more than 130 countries to adapt the international tax system. The current proposal would require multinational businesses to pay some of their income taxes where their consumers or users are located. According to the OECD, an agreement is expected this year.

However, despite these ongoing multilateral negotiations, several countries have decided to move ahead with unilateral measures to tax the digital economy. About half of all European OECD countries have either announced, proposed, or implemented a digital services tax (DST), which is a tax on selected gross revenue streams of large digital companies. Because these taxes mainly impact U.S. companies and are thus perceived as discriminatory, the United States has responded with retaliatory threats.

Digital Services Taxes in Europe. Digital taxes in Europe that have been implemented, announced, and proposed. Learn more about digital taxation in Europe, digital economy tax, current state of digital taxes in europe

As of June 22, Austria, France, Hungary, Italy, Poland, Turkey, and the United Kingdom have implemented a DST. Belgium, the Czech Republic, Slovakia, and Spain have published proposals to enact a DST, and Latvia, Norway, and Slovenia have either officially announced or shown intentions to implement such a tax.

The proposed and implemented DSTs differ significantly in their structure. For example, while Austria and Hungary only tax revenues from online advertising, France’s tax base is much broader, including revenues from the provision of a digital interface, targeted advertising, and the transmission of data collected about users for advertising purposes. The tax rates range from 2 percent in the UK to 7.5 percent in both Hungary and Turkey (although Hungary’s tax rate is temporarily reduced to 0 percent).

Although these DSTs are generally considered to be interim measures until an agreement is reached at the OECD level, it is unclear whether all of them will be repealed at that point.

Announced, Proposed, and Implemented Digital Services Taxes in European OECD Countries, as of June 22, 2020
Country Tax Rate Scope Global Revenue Threshold Domestic Revenue Threshold Status

Austria (AT)


Online advertising

€750 million (US $840 million)

€25 million ($28 million)

Implemented(Effective from January 2020)

Belgium (BE)


Selling of user data

€750 million ($840 million)

€5 million ($5.6 million)

Proposed (A DST was first introduced in January 2019 but was rejected in March 2019; an adjusted DST proposal was reintroduced in June 2020)

Czech Republic (CZ)


  • Targeted advertising

  • Use of multilateral digital interfaces

  • Provision of user data (additional thresholds apply)

€750 million ($840 million)

CZK 100 million ($4 million)

Proposed (Delayed until 2021 to wait for agreement at the OECD level; there have been discussions to lower the proposed tax rate)

France (FR)


  • Provision of a digital interface

  • Advertising services based on users’ data

€750 million ($840 million)

€25 million ($28 million)

Implemented(Retroactively applicable as of January 1, 2019; France has agreed to suspend the collection of the DST until December 2020 in exchange for the U.S. agreeing to hold off on retaliatory tariffs on French goods)

Hungary (HU)


Advertising revenue

HUF 100 million ($344,000))


Implemented (As a temporary measure, the advertisement tax rate has been reduced to 0%, effective from July 1, 2019 through December 31, 2022)

Italy (IT)


  • Advertising on a digital interface

  • Multilateral digital interface that allows users to buy/sell goods and services

  • Transmission of user data generated from using a digital interface

€750 million ($840 million)

€5.5 million ($6 million)

Implemented(Effective from January 2020)

Latvia (LV)


Announced/Shows Intentions (The Latvian government commissioned a study to determine the increase of tax revenue based on the assumption that the country levies a 3% DST)

Norway (NO)

Announced/Shows Intentions (Norway plans to introduce a unilateral measure in 2021 if the OECD does not reach a consensus solution in 2020)

Poland (PL)


Audiovisual media service and audiovisual commercial communication

Implemented (Effective from July 2020)

Slovakia (SK)

Proposed (The Ministry of Finance opened a consultation on a proposal to introduce a DST on revenue of nonresidents from provision of services such as advertising, online platforms, and sale of user data; however, there were no further steps taken and none of the political parties have put forward digital tax as their priority agenda)

Slovenia (SI)

Announced/Shows Intentions (The Ministry of Finance announced a government proposal to submit a draft bill to the National Assembly introducing a digital services tax by April 1, 2020; however, there has been no development so far)

Spain (ES)


  • Online advertising services

  • Sale of online advertising

  • Sale of user data

€750 million ($840 million)

€3 million ($3 million)

Proposed (The bill passed a parliamentary vote on June 4, and now continues to the Lower House Budget commission, which will discuss partial amendments)

Turkey (TR)


Online services including advertisements, sales of content, and paid services on social media websites

€750 million ($840 million)

TRY 20 million ($4 million)

Implemented (Effective from March 2020; the president can reduce the DST rate as low as 1% or increase it as much as 15%)

United Kingdom (GB)


  • Social media platforms

  • Internet search engine

  • Online marketplace

£500 million ($638 million)

£25 million ($32 million)

Implemented (The UK government stated in its Finance Bill 2020 that the DST would go into effect as of April 1, 2020; the Finance Bill is currently in Parliament and is expected to be enacted this summer)

Source: KPMG, “Taxation of the digitalized economy: Developments summary,” June 19, 2020, https://tax.kpmg.us/content/dam/tax/en/pdfs/2020/digitalized-economy-taxation-developments-summary.pdf.

June 22, 2020 Update:

  • Belgium reintroduced an adjusted DST proposal, a 3 percent tax on revenues from activities such as the selling of user data on companies with global revenues exceeding €750 million (US $840 million) and domestic revenues exceeding €5 million ($5.6 million).
  • The Czech Republic lowered its proposed DST rate from 7 percent to 5 percent and postponed the effective date to January 2021.
  • Poland approved a 1.5 percent fee/tax on online streaming services, effective from July 2020.
  • Spain’s DST proposal passed a parliamentary vote on June 4, 2020, and will now continue to the Lower House Budget commission, which will discuss partial amendments.

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