EU close to deal to tax tech giants

French Finance Minister Le Maire says in a radio interview that the European Union has almost reached an agreement on the plan to tax large tech companies, despite resistance from some member states.

Reuters writes that Le Maire expressed confidence that France, together with Germany, can get the other EU member states to come up with a plan. Broadly speaking, the two countries agree, although Germany, according to the news agency, came up with points for attention last week that it would like to see changed. France wants an agreement within the EU before December.

In March this year, the European Commission announced that its plan to tax large tech companies for their digital activities is expected to generate €5 billion a year. That is based on a rate of three percent. The tax targets, among other things, income from the sale of advertising space on the Internet, from the sale of user-generated data and from ‘activities through which users can contact each other or sell each other goods and services’.

The companies are only taxed if they have an annual worldwide turnover of at least EUR 750 million and the European income is at least EUR 50 million on an annual basis. In addition, the turnover in an EU Member State must be at least 7 million euros and the number of users at least 100,000 before the relevant Member State starts taxing the company under these new laws.

According to the European Commission, the activities to be taxed are difficult to overcome with existing tax rules, meaning that large tech companies pay relatively less tax than companies in traditional sectors. The package of measures is temporary and will apply until a more comprehensive reform of the European corporate tax system.