Europe’s New Idea: Taxing User-Generated Profit – Wall Street Journal

LONDON—The European Union’s justification for a new tax on technology companies hinges on a novel view of how profits are generated, one that the U.K. Treasury has espoused.

Traditionally, the profits of a company operating internationally have been taxed where its major decisions are made and where its most important assets are controlled. In practice, those taxes are often levied in countries where the company also has a large number of customers, but the location of users of its product or service isn’t decisive.

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