EU finance ministers drop proposal for digital tax

by Julie Martin, MNE Tax

EU finance ministers today formally abandoned a proposal to introduce an immediate, temporary, EU-wide tax on the revenue of large multinational firms in the digital sector. The tax would have been a stop-gap measure, applying until global consensus is reached on a long-term solution to taxing multinational digital firms.

Speaking at a meeting of EU finance ministers in Brussels today, Romanian Minister Eugen Teodorovici said that the opposition of a few EU Member States to a digital services tax and advertising tax is “of a fundamental nature.” Sweden Finland, Denmark, and Ireland oppose the tax.

Thus, the EU will abandon immediate action, Teodorovici said, and instead focus on the broader international tax discussions now underway at the OECD and G20 level. Teodorovici said that if progress is not made by the end of 2020 on global efforts to revise the international tax system, the EU will revisit the issue at that time.

While the move will likely be welcomed by digital giants such Google, Facebook, Uber, and Airbnb, companies will still need to contend with a host of separate and differing EU taxes aimed at large digital firms. France, the UK, Italy, and Spain have already moved on such unilateral measures.

The original EU proposal for an EU-wide digital service tax, presented just over one year ago, contemplated a 3 percent levy on the revenue of large multinationals that sell online advertising or provide online sales platforms.

Julie Martin

Julie Martin

Founder & Editor at MNE Tax

Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.

Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.

Julie can be reached at jmartin@mnetax.com.

Julie Martin
Julie can be reached at jmartin@mnetax.com.


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