Sunday

3rd Jul 2022

EU summit text on tech tax aims to please both sides

  • French president Emmanuel Macron (r) wants Jean-Claude Juncker's European Commission to come with proposals on taxation in the digital era (Photo: European Council)

EU leaders have not yet made a clear choice about how to make sure digital companies pay their fair share of taxes.

At an EU summit in Brussels on Thursday (19 October), they adopted a text that balances the wishes of two groups of countries - and can be interpreted as victory by both.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Irish prime minister Leo Varadkar wants new taxation rules to be agreed at the international level, not just by the EU (Photo: European Council)

One group wants new rules on taxation for global internet giants to be agreed at an international level through the Organisation of Economic Cooperation and Development (OECD), while another, led by France, wants the European Union to go it alone if that international agreement is delayed.

Upon his arrival at the summit on Thursday afternoon, Irish leader Leo Varadkar told the press that the member states did not agree on the digital taxation part of the summit conclusions "just yet".

"The position of Ireland … is that if we are going to do anything on digital taxation, we should do it on an international basis through the OECD," said Varadkar.

He said the Irish position was "shared by lots of other countries, particularly smaller northern European countries, and some countries in the Mediterranean as well".

The influence of those countries can be seen when comparing the summit conclusions with earlier draft versions, which traditionally circulate in Brussels ahead of the summit.

The final text said that "it is important to ensure that all companies pay their fair share of taxes and to ensure a global level-playing field in line with the work currently underway at the OECD".

The word "global" and the second part "in line … OECD" were added on Thursday.

On Friday, Varadkar said his country was "successful" in adding the position on OECD into the conclusions.

Luxembourgish prime minister Xavier Bettel is one of those in the group that want OECD rules.

"I'm not going to complain about the results," he said at a press conference at the summit.

But the summit conclusions still task the European Commission to come up with proposals in parallel.

They said the leaders looked forward "to appropriate Commission proposals by early 2018".

In earlier drafts, no date was given, but the word "speedily" was used.

The timing probably means that the Commission will need to come with proposals before knowing the outcome of a discussion on an OECD report about the topic at a G20 meeting in April 2018.

A French source said that France "obtained" that the Commission will come up with a proposal for the European framework independently of the OECD report.

Commission paper

Thursday's debate follows a paper published by the European Commission about the issue one month ago, and a proposal by the four biggest eurozone countries to tax tech giants on their turnover instead of on their profits.

The report noted that the EU's de facto average tax rate of companies with a digital domestic business model was 8.5 percent, much lower than the effective average tax rate of those with a traditional domestic business model, which stood at 20.9 percent.

"Member states are losing tax revenues," EU commissioner for the euro, Valdis Dombrovskis, said at the presentation of the report.

He did not propose any new legislation yet.

But the Commission did say in its report that the EU should "focus on EU solutions if progress at international level proves too slow", and that the EU's executive could table proposals by the spring of 2018.

A Commission official, speaking on condition of anonymity after the presentation in September, said it was not yet clear if those EU proposals would be tabled before or after the G20 debate.

"It will be political decision that the college [of EU commissioners] will have to take about the timing of a possible proposal," the source said.

Crucial will be the interpretation of the phrase "by early 2018".

EU takes time to ponder tech giant tax

The EU commission published a paper that outlined several options on how to increase tax income from internet companies' activities, but fell short of proposing legislation.

Facebook to shift ad revenue away from Ireland

Public pressure about low corporate taxes appear to have pressured Facebook to launch plans to stop routing international ad sales through its Dublin-based headquarters in Ireland.

Stakeholder

The CPDP conference wants multidisciplinary digital future

During the Computers, Privacy and Data Protection (CPDP) conference, many high-level discussions will touch upon the dynamics of decision-making in the design of new technologies, including the importance of inclusion, diversity, and ethics perspectives within these processes.

EU Commission won't probe 'Pegasus' spyware abuse

The European Commission says people should file their complaints with national authorities in countries whose governments are suspected of using an Israeli-made Pegasus spyware against them.

News in Brief

  1. EU Parliament 'photographs protesting interpreters'
  2. Poland still failing to meet EU judicial criteria
  3. Report: Polish president fishing for UN job
  4. Auditors raise alarm on EU Commission use of consultants
  5. Kaliningrad talks needed with Russia, says Polish PM
  6. Report: EU to curb state-backed foreign takeovers
  7. EU announces trade deal with New Zealand
  8. Russia threatens Norway over goods transit

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Nato's Madrid summit — key takeaways
  2. Czech presidency to fortify EU embrace of Ukraine
  3. Covid-profiting super rich should fight hunger, says UN food chief
  4. EU pollution and cancer — it doesn't have to be this way
  5. Israel smeared Palestinian activists, EU admits
  6. MEPs boycott awards over controversial sponsorship
  7. If Russia collapses — which states will break away?
  8. EU Parliament interpreters stage strike

Join EUobserver

Support quality EU news

Join us