15/09/2017 - Posted in ICT & Digital

New tax for internet giants?

Our expert's opinion

"The rise of digital sales and e-commerce in Europe makes our governments look at the real impact of these activities on the treasuries. Therefore, a proposal has been made by the ministers of finance of France, Germany, Italy and Spain, in order to impose an "equalization tax" so the companies' tax rates are back in line with normal corporate rates. This proposal will only be valid if all European Union member countries support it unanimously. I'm curious to see if this potential regulation, which would impose taxes on turnover rather than on profits, will slow down growth and investments in the field of e-commerce. If this regulation will be put in effect it would potentially allow smaller companies and brick and mortar companies to gain back their competitiveness."

- Matthias Van den Bempt, Senior Associate

Europe wants to tax internet giants based on revenues

France, Germany, Italy and Spain want digital giants like Amazon and Google to be taxed on total revenue generated in EU countries rather than profits. The initiative was launched by the French finance minister and is set to be presented to all 28 EU finance ministers this Friday.

Currently, big tech companies such as Apple, Facebook, Amazon and Google are taxed in Europe based on profits rather than revenues. As a result, some companies have been able to pay little or no tax in countries where they have billions in sales, the Financial Times writes.

‘Companies pay minimal amounts of tax’

The four finance ministers of France, Germany, Italy and Spain have written a joint letter, addressed to the Estonian EU presidency and the European Commission. “We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries”, the ministers wrote.

The ministers now want to propose an “equalization tax”, so the companies’ tax rates are back in line with normal corporate rates. “The amounts raised would aim to reflect some of what these companies should be paying in terms of corporate tax.”

The tax proposal will only be approved by the European Union when all member countries support it unanimously. Including countries that do the tax sheltering, like Luxembourg and Ireland.


Source: Ecommerce News Europe

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