Features of taxation of digital services in Ukraine and the EU: a comparative legal analysis

Abstract

Introduction. This paper is devoted to a comparative legal analysis of digital services taxation systems in the European Union and Ukraine. In the modern conditions of the development of the e-commerce market, the question of revising the approaches to taxation of digital services is becoming more and more relevant. The purpose of the paper is to identify and compare the specifics of the legal problems of taxation of digital services and the mechanisms for solving them in the European Union and Ukraine. Results. The legal aspects and legal acts governing the taxation of digital services in both jurisdictions have been studied. Special attention is paid to the application of the concept of Digital Permanent Establishment (taxation based on digital presence), which is applied in the context of taxation of digital companies and their presence in countries where they do not have physical offices or branches. The authors highlighted the factors affecting the determination of the jurisdiction (country) for the provision of digital services: 1) the place of company registration; 2) physical presence; 3) location of the consumer; 4) value added tax rules and sales volume; 5) international agreements and tax treaties; 6) judicial practice; 7) rules of a specific industry. In the conclusions, the authors cite current trends and challenges related to digital taxation, and provide recommendations for the further development of these systems. Digital taxation is a topical issue for the EU and Ukraine. Both jurisdictions have implemented systems for taxing digital services through VAT. However, it is considered important to pay more attention to international coordination and improvement of tax regimes to support the development of the digital economy and entrepreneurship.