Following his participation at an informal meeting of EU finance ministers in Sofia, Bulgaria on Friday and Saturday, Minister of Finance Toomas Tõniste (IRL) said that although it is a difficult issue, the matter of taxation of the digital economy needs to be resolved quickly.
"For example, differences between member states must be considered, and thus thresholds which will designate companies under the digital services tax should be approached flexibly," said Tõniste.
The ministers on Saturday discussed the future of the taxation of companies, including European Commission proposals concerning the taxation of the digital economy. According to these proposals, a temporary tax is to be levied on companies with a global revenue of €750 million and a specific digital services sales revenue in the EU exceeding €50 million. The sale of online advertising services and user data as well as mediation platform services would be taxed.
According to a second long-term solution, profit earned across borders would be taxed even if the company does not have a physical location in the country. The basis of the taxation is a significant economic presence, which is established in the country in the event of sales revenue of €7 million, 100,000 users or 3,000 business contracts.
"100,000 users is something completely different from the Estonian perspective than for Germany, for example," Tõniste noted.
While in Sofia, the ministers also discussed proposals concerning a banking package aimed toward decreasing risks that Estonia generally supports. Bulgaria, the current holder of the EU presidency, is to reach an agreement concerning the package at the finance ministers' next meeting, after which discussions regarding joint savings insurance can move forward.
In discussions concerning the strengthening of the European Economic and Monetary Union (EMU), the ministers touched upon topics concerning convergence. Based on the experience of recent decades, belonging to EMU has not restricted convergence — that is, the euro cannot be blamed for structural underperformance. Much depends on the policy choices of the countries themselves in creating a growth-friendly environment.
Bulgaria also introduced three directions for the further development of capital markets, according to which an institutional framework is vital for the functioning of capital markets. More uniform supervision would help enhance this even further. Estonia is not convinced that the centralization of the powers of supervisory authorities will necessarily ensure a greater efficiency of supervision; rather, it believes that granting central supervision powers to the European Securities and Markets Authority may increase the administrative burden of smaller investment service providers.
The ministers at the Eurogroup meeting on Friday received an overview of the preparations for the last review of Greece's financial assistance program. The program is to end in summer 2018.
The finance ministers of the euro area also discussed the review of the European Commission concerning the wage developments of euro area countries. Wage growth is still slow in the euro area as a whole, and its acceleration would help raise internal demand as well as living standards.
Editor: Aili Vahtla