The Digital Service Tax and fundamental freedoms: Appraisal under the doctrine of Measures Having Equivalent Effect to Quantitative Restrictions (“MEQR”)

This article focuses on the evaluation of the European proposal on a common system of a digital service tax (DST) on revenues resulting from the provision of certain digital activities in light of its compatibility with the freedoms of goods and services. The compatibility test targets the whole set of taxable services falling under the scope of the DST proposal. The reason of the present examination stems from the current co-exercise of traditional and digital similar services in the Digital Single Market (DSM) and the impact the DST could have in market competition. A high risk is found for the DST to run counter the aim of the DSM itself. The analysis points out on the possible restrictions on the freedoms of goods and services by the DST imposition on the taxable services falling under its scope in the framework of the Measures Having Equivalent Effect to Quantitative Restrictions (MEQR) doctrine and the relevant ECJ case law (including possible justifications on the identified restrictions and proportionality assessment). Pursuant to the above, the article proposes that the digital intermediation services should be excluded from the scope of the DST until a comprehensive solution is reached.