Taxation of Digital Business and Social Media: Contribution of the Court of Justice to the Compatibility with EU Fundamental Freedoms

Abstract

Various factors have made it difficult for tax jurisdictions where profits are generated to tax digital business, among which is effectively social media. Although several attempts have been made at the international level to introduce a digital services tax to remedy this situation, no solution has yet been adopted. This has led to striking situations of tax inequality that have been addressed through the adoption of national digital taxes (NDTs) that have a controversial relationship with the Treaty on the Functioning of the European Union. The Court of Justice of the EU (CJEU) analyzes this issue in the Tesco-Global and Vodafone rulings, declaring the compatibility of national digital taxes with the EU's fundamental freedoms and state aid rules.