Are these the new taxes imposed on PayPal, Apple Pay, and similar digital payment services?
In a significant development, the European Commission has dropped plans for a digital tax on digital companies, including payment services, as part of its next long-term budget considerations. This decision, partly due to pressure from the US and ongoing trade negotiations, marks a shift in the EU's approach to taxing the digital economy.
Instead, the focus is on measures to enhance tax transparency, administrative cooperation, and VAT modernization affecting digital and payment-related services. These include the DAC9 regulation, which standardizes information exchange protocols among EU countries for tax reporting and supports global minimum tax rules, and the VAT in the Digital Age (ViDA) package, aimed at modernizing VAT rules with digital invoicing and reporting becoming mandatory by 2030.
While these changes may involve increased administrative and compliance costs, greater reporting obligations, and adjustments to systems to handle digital invoicing and data exchange mandates for payment providers, there is no direct imposition of a new digital tax on the payment services sector at this time.
The use of the NFC interface, online payments, and the wallet are digital payment services. In the past, the EU Commission has not been lenient with US payment companies when it comes to potential competition violations. For instance, Apple narrowly avoided a fine by having to open up its NFC interface for contactless payments to third parties.
However, some countries, such as France, Austria, Italy, and Spain, have already implemented a digital tax but have exempted payment processing and other digital services related to payment services. The digital association Bitkom warns that a tax on software and cloud solutions could lead to price increases, potentially disrupting the work of domestic start-ups in the fintech sector.
The Banking Association cautions that the EU Commission implementing a Digital Service Tax (DST) on payment services could adversely affect domestic companies and consumers. This concern is shared by Piero Cipollone, a member of the ECB's board, who emphasized the need for European payment sovereignty.
Meanwhile, European banks like EPI with Wero or Bizum in Spain are working on innovations to improve people's lives, but they may struggle to reach the necessary scale to offer a service for all people in the eurozone. Lukas Homrich, a freelance journalist and member of the dreimaldrei journalists' bureau, continues to closely follow these developments and their implications for the economic and financial landscape.
- The shift in the EU's approach to taxing the digital economy, as seen in the focus on measures like the DAC9 regulation and the ViDA package, could indirectly influence the business strategies of financial institutions that offer digital payment services, especially when considering the potential impact of administrative costs and system adjustments.
- In light of the ongoing dialogue about the Digital Service Tax (DST) on payment services, the European Commission's stance on this matter carries significant implications for the fintech sector, with concerns raised about potential adverse effects on domestic companies and consumers, as well as the need for European payment sovereignty.
