EU digital tax on tech companies is off for the time being

There will be no EU-wide tax scheme for technology companies for the time being. Valdis Dombrovskis, a vice-president of the European Commission, made this known by expressing some disappointment. Some EU member states have objections to the plan.

According to Valdis Dombrovskis, no agreement has been reached on this point. The Commission is disappointed about this because, according to Dombrovskis, the European economy is becoming increasingly digital and existing tax systems are becoming increasingly outdated. The Commission also points out that in the absence of a joint settlement, individual countries are now taking steps to achieve ‘digital tax legislation’. According to Dombrovskis, this leads to a fragmentation of the European internal market.

A good example of this is France, which recently set up its own tax regime for Google, Apple, Facebook and Amazon. Countries such as Spain and Italy have already announced such measures. The French digital tax is estimated to generate an annual amount of 500 million euros for the treasury.

It seemed that the European countries would come out together. A year ago, the European Commission came up with a plan to tax large tech companies for their digital activities. This would be expected to yield five billion euros per year, based on a rate of three percent. The European Parliament approved this plan and Bruno Le Maire, the French economy minister, indicated in November last year that the EU had almost reached an agreement. However, a watered-down compromise proposal from Germany and France that was mainly aimed at taxing online advertising ultimately failed. Ireland, Sweden and Denmark are the main opponents.

Dombrovskis argues that the EU should come up with a digital tax in light of recent ‘international developments’. The Latvian politician is referring, among other things, to the OECD. This organization is currently working on a global proposal for an international digital tax. Sweden believes that this should first be waited for. If no agreement is reached within the OECD next year, the EU proposal will probably be discussed again.