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Tânia de Almeida Ferreira, Partner, and Coordinator of the tax department of CCA Law Firm spoke to LUSA about the difficulty of taxing the new economic reality, in particular when it comes to remote digital services such as those provided by platforms as Netflix or HBO, among many others.
The vast majority of tax regimes in the European Union provide that companies based in their respective countries will be taxed on all income earned, whether in their country or in other countries. In order to avoid double taxation (potentially generated by taxation that countries other than the country of headquarters may impose), the world-wide rule is the exclusive taxation of services in the country of the headquarters of the beneficiary of the income. This is why technology companies generally choose to base their headquarters in countries with a more favorable tax regime, such as Ireland, Malta or the Netherlands.
According to Tânia de Almeida Ferreira, even though acknowledging "the importance of the challenge and the importance of digital economy in the context of the distribution of fiscal powers between States", the truth is that "at an international level, it has not yet been possible to reach agreement on this issue".
The crux of the matter problem is not that technology companies do not pay taxes, but that income generated in a given country ( through the payment of subscription fees, for instance) are taxed only in the State where the company providing the digital service is located.
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- LUSA