EU Finance Ministers will discuss a revised proposal for a common European digital tax. The new proposal by the Austrian Presidency of the Council of EU aims to change the mind of MS who oppose the tax by the end of the year.
According to the European Commission’s proposal of March, EU countries will charge 3 percent of the digital turnover of large companies, such as Google and Facebook, who are accused of relocating their profits to EU countries with low taxes.
The EC also proposes a temporary solution to tax certain activities that are currently not subject to taxes so that they can create additional revenue for Member States. The aim is to avoid the scenario in which each EU country decides to apply a different policy to online companies. This will complicate the subsequent unification of tax regulations on Internet activities and could therefore have a negative impact on the creation of the Digital Single Market.
The planned tax encounters opposition from some Member States and may lead to uncoordinated application within the Union. Ireland and Luxembourg are against the measure, afraid they will reduce their tax revenue. At the same time, large European countries, such as France, for example, are demanding the fast introduction of the tax. In order to overcome the opposition, Austria proposes to set a precise date when the tax is completed, states the document.
In September, Apple reimbursed the Irish government 14.3 billion dollars, following the European Commission’s order. The EC initiated a court case against Ireland last year due to the delay in recovering tax avoidance. The case was suspended after payment has already been made.
The tax has always been planned as a temporary solution affecting the revenues of digital companies that avoid many taxes thanks to their cross-border and virtual business.
A clause providing for automatic expiration of the tax is already supported by most EU Member States, but has so far been linked to a global tax reform agreement. According to the Austrian proposal, the application of the tax can be completed at a precise date.
Meanwhile, the Executive Directors of 16 technology companies based in the EU sent a letter to the group of the 28 EU Finance Ministers, which opposes the current 3 percent income tax on large digital companies. The letter signed by companies such as Spotify and Booking.com states that the measure would be disproportionate to the business of European digital companies, rather to to the US giants for which it was created.
