The European Commission (EC) is seeking new revenue sources to kickstart post-pandemic economic growth. In a ground-breaking move, the yet-to-be-approved Digital Services Act (DSA) proposes a yearly levy of 0.1% of annual net income on ‘very large’ online platforms, intended to cover the costs involved in monitoring compliance.

Reuters reports that the DSA proposal will enter fourth-round discussions in the EC meeting on 22 April 2022, and is predicted to be approved. This would be the first compliance monitoring levy ever imposed in the EU.

Only very large online platforms, which the EU defines as those platforms with 45 million or more active monthly users, will be liable for the charge. The relevant documentation states that the fee should be in proportion to both the size of the service and the number of EU-based users. Not-for-profit providers and very large online search engines will be exempt, which will benefit research bodies and platforms like Wikipedia.

While this is an unprecedented move for the EC, it is comparable with national telecoms regulators and the European Securities and Markets Authority – both of whom impose fees on entities they supervise.

The monitoring and compliance functions involved with digital services have grown exponentially in the last few years due to GDPR, ESG, and other regulated requirements, and this levy is intended to subsidise the costs of the function. Reuters reports they have viewed the DSA documentation, which states: “The overall amount of the annual supervisory fees shall be based on the estimated costs the Commission incurs in relation to its supervisory tasks under this regulation.”

We will monitor news on this levy and keep you informed.

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