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EU may bring in "digital tax" next year

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The incoming commissioners of the European Union have said that if a global arrangement on taxing technology giants isn’t formulated by the end of next year, it will act independently.

Answering questions raised by EU lawmakers, the two commissioners-designate, Margrethe Vestager and Paolo Gentiloni, answered that fiscal rules and financial reforms should be among the top priorities, and that the efforts to overhaul corporate taxation to better reflect profits made by digital multinational giants failed to produce desired results.

This is mostly as different countries approach taxes differently.

“If no effective agreement can be reached by the end of 2020, the EU should be willing to act alone” on a digital tax, said the incoming commission’s vice-president Margrethe Vestager.

Paolo Gentiloni added that he will be looking to prevent individual EU governments from the ability to veto tax-related decisions, something that seems to be an obstacle in the EU.

The two new commissioners should take office in November.

Late last year, it was said that the EU was “close” to digital tax on tech giants (opens in new tab), after the French and the Germans came to an agreement.

“We are close to having a deal in our hands,” Finance Minister Bruno Le Maire told France Inter radio, at the time adding that he was confident that Germany would back the agreement.

Sweden, Ireland and Denmark were against the proposed agreement (opens in new tab), for different reasons. Ireland homes EU offices for some of the world's largest companies, mostly due to its lenient tax laws.

“What kind of reaction would this bring if this was a model that was imposed on us?” Irish finance minister Paschal Donohoe said.

Large tech corporations, like Google, Facebook or Amazon, are often criticised as not paying enough in taxes (opens in new tab), given that they operate globally.

Sead Fadilpašić
Sead Fadilpašić

Sead Fadilpašić is a freelance tech writer and journalist with more than 17 years experience writing technology-focussed news, blogs, whitepapers, reviews, and ebooks. And his work has featured in online media outlets from all over the world, including Al Jazeera Balkans (where he was a Multimedia Journalist), Crypto News, TechRadar Pro, and IT Pro Portal, where he has written news and features for over five years. Sead's experience also includes writing for inbound marketing, where he creates technology-based content for clients from London to Singapore. Sead is a HubSpot-certified content creator.