France and Germany aim to keep digital tax alive with new proposal

Elias Hubbard
December 5, 2018

Both companies are among Ireland's biggest employers and pay significant corporation taxes here, though the bills are a tiny fraction of the massive revenues booked here.

After half a year of intense debate and bickering between member states, the European Commission proposed on Wednesday (21 March) a new system for taxing digital companies that will charge large firms 3% of their revenue and will hit USA tech giants like Google and Facebook.

France's finance minister Bruno Le Maire has attempted to play down concerns some countries, including Ireland, might have.

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

But Ireland is fuming, and wants any major changes to worldwide taxation to be agreed through the Organisation for Economic Corporation and Development (OECD), where major non-EU countries such as the United States are also represented.

Finance Minister Paschal Donohoe is understood to have reiterated that position at yesterday's meeting in Brussels.

"Rather than pursuing measures like this that would result in double taxation", he said, "countries should continue working together through the OECD framework on the important global dialogue regarding the digital economy".

"Ireland will engage constructively over the coming weeks and months".

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.

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".

In a joint statement, Germany and France stress, according to information from the European Union circles, now their "determination, a fair and effective tax on big digital companies". Both sides expect, therefore, that it will not be until 2020, an agreement in the OECD framework for digital taxation, which the European Union tax would be necessary.

European Commissioner for Economic Affairs Pierre Moscovici stated at a meeting of the bloc's finance ministers that they can't make the new legislative proposal that France and Germany have pleaded for. 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.

The latest proposal is meant to come into force in January 2021, but only if the Organisation for Economic Co-Operation and Development (OECD) fails to reach a consensus on a global approach by then. It would expire in 2025. The directive would not prevent Member States from introducing in their domestic legislation a digital tax on a broader base.

Other reports by Click Lancashire

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