In addition, the UK came third overall in terms of human capital, coming fifth in terms of internet literacy and sixth in terms of ICT specialists and basic digital skills.
"A true digital economy is one where businesses take full advantage of the possibilities and benefits offered by digital technologies, both to improve their efficiency and productivity, as well as to reach customers and realise sales," the report said.
The report found that online service completion, the sophistication of provisioned services and the availability of pre-filled forms were very poor.
Ahead of the UK overall in terms of their digital advancement were Denmark, Sweden, the Netherlands, Finland and Belgium.
The European Commission figures also revealed that the UK is one of the largest beneficiaries of funding from Horizon 2020, a project that awards funding to innovative research projects.
The UK has received €2.1bn from Horizon 2020 since the launch of this programme in 2014 it runs till 2020 and €7bn under the Framework Programme & FP7 , the predecessor research funding programme
Greece and Slovenia were the countries that received the highest funding in relation to the size of their IT sector.