Termination of Actions in the Section 301 Digital Services Tax Investigations of Austria, France, Italy, Spain, and the United Kingdom and Further Monitoring

Issuing agencies

Abstract

On October 8, 2021, Austria, France, Italy, Spain, and the United Kingdom joined the United States and 130 other jurisdictions participating in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting in reaching a political agreement on a two-pillar solution to address tax challenges arising from the digitalization of the world economy. As part of Pillar 1, all parties agreed to remove existing Digital Services Taxes (DSTs) and other relevant similar measures, and to coordinate the withdrawal of these taxes. On October 21, 2021, the U.S. Department of the Treasury (Treasury) issued a joint statement with Austria, France, Italy, Spain, and the United Kingdom on a transitional approach to those countries' DSTs prior to entry into force of Pillar 1. The joint statement reflects a political agreement that DST liabilities accrued during the transitional period will be creditable in defined circumstances against future income taxes due under Pillar 1. Based on the commitments of Austria, France, Italy, Spain, and the United Kingdom to remove their DSTs pursuant to Pillar 1 and on their political agreement to the transitional approach prior to Pillar 1's entry into force, the U.S. Trade Representative has determined to terminate the section 301 actions taken in the respective investigations of these countries' DSTs. In coordination with Treasury, USTR will monitor implementation of the removal of these countries' DSTs as provided for under Pillar 1 and the transitional approach as provided in the joint statement.