European Parliament approves proposal for ‘digitaks’ for tech giants

Dec

13

2018

European Parliament has agreed to a proposal to impose taxes on digital services. The vote does not mean that the tax will come, because the European Commission and the Council of Ministers still have to agree to this.

The measure would allow Member States to levy taxes on revenues from digital services even if companies are not physically present in the country. That would affect, for example, Google, Facebook and Amazon. Now it is true that companies can pay the tax in the country where they are located, allowing them to avoid higher tax rates by keeping their offices in ‘tax-friendly’ countries.

The new rules stipulate that if a company has a lot of interaction with users, it is enough for a member state to be able to levy taxes. The vote will come a week after the Council of Ministers has rejected such a proposal and came up with an attenuated version that will only take effect in three years.

The tax rules would only apply to large companies, because a limit applies to income in a country of seven million euros and a limit of one hundred thousand users in a country or more than three thousand contracts for the business market.

The mood does not change much. The Council must now consider Parliament’s opinion, but is not bound by the will of the majority of Parliament. As a result, it is still unknown whether the reforms of the tax rules will come about.

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