Digital age and corporate taxation. European Union on the way to create a unilateral digital taxation regime

Abstract

The digitalization of the economy has rapidly changed the outlook of the business models today. It is no longer necessary for an entity to be located within a country to generate enormous amounts of revenues deriving from it. At the same time, the corporate taxation principles have not changed in order to adopt to this situation- when establishing the place of taxation they do not take into the consideration where the consumers are located. Thereby, an unfair treatment towards Member States has been created as today large revenues for big tech companies can be created within their territory without having a burden to pay a tax. Answering to the global discussion the European Commission has created two proposals for the Directives with an intention to tax digital companies. Understanding elements that would change after the Directives are implemented is at utmost importance, as they would re-create the way how the corporate taxation system functions within the time of the digitalization of the economy. This thesis analyzes the differences between the Directives paying special attention towards the determination of the taxable persons, taxable revenues and the territorial scope. Additionally, the possible problems deriving from both proposals for the Directives will be analyzed.