Published: Thu, December 06, 2018

European Union fails to reach digital tax agreement

European Union fails to reach digital tax agreement

France and Germany sought on Monday (3 December) to salvage a proposed EU tax on big digital firms by narrowing the focus to cover only companies' online advertising revenue, a European source said. He urged the European Union to reach a compromise on the revenue levy for digital giants by March.

On Tuesday, France and Germany tabled a new plan that would see a three percent tax imposed on advertising sales on tech giants such as Google and Facebook, instead of the far wider scope of a doomed earlier proposal.

He said: "Like any European compromise, some will be disappointed".

Le Maire's struggle was against Ireland and a group of mostly nordic countries that has furiously resisted an EU-only digital tax. "They'll say it's not enough and I can understand them".

The Irish position is that any major changes to worldwide taxation should be agreed through the Organisation for Economic Cooperation and Development (OECD) level - where the U.S. and other big non-EU countries are also represented.

The new proposal, which was obtained by Politico prior to yesterday's meeting, effectively ends the European Commission's proposed "digital services tax".

Ireland's finance minister Paschal Donohoe reportedly made that position clear again during a meeting in Brussels on Tuesday.


"The Minister continues to have strong principled concerns about this policy direction as previously outlined".

"The new Franco-German proposal is only for political show to keep up appearances", said MEP Eva Joly, who tracks tax evasion issues for the Greens party.

Finnish finance minister Petteri Orpo said: "I promise to be constructive and I'm ready to look at the proposal, but I still have serious concerns with it".

"We expect the OECD will reach an agreement by 2020 on proposals aimed at tackling the challenges raised by the digitalisation of the economy and tax avoidance".

Major compromise: The inital proposal was much further reaching, aiming to tax all online revenue made in the European Union by firms with a worldwide annual turnover of at least €750 million ($850 million) and an online turnover of €50 million in Europe. For the other case is due to be adopted at the European Union level, no later than March, a Directive, which would apply from 2021.

Under this proposal, the tax would not come into force until January 2021, and only if no worldwide solution has been found. Paris and Berlin proposed that it expire by 2025 in a move aimed at appeasing concerns that it may become permanent. "It will expire by 2025".

The tax plan requires unanimous support to come into force as EU-wide legislation.

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