The four largest economies in the Eurozone are calling for internet giants to be taxed based on the revenue they generate, rather than profits, in an effort to prevent them from benefiting from low tax rates in some member states, reported the European portal EUobserver.
In a joint letter to the Estonian presidency and the European Commission (EC), the finance ministers of France, Germany, Italy, and Spain are urging the EC to introduce a compensatory tax on revenues so that internet companies can pay taxes where they generate income, rather than in the country where they are registered.
Currently, companies like Google, Apple, Facebook, and Amazon, known as Gafa, are allowed to pay minimal taxes in Europe thanks to subsidiaries in member states with low tax rates, such as Ireland.
They report profits where their subsidiary is located, even when they generate income in other countries, the online portal writes.
In July, a French court ruled that Google, now part of the parent company Alphabet, is not required to pay more than one billion euros in unpaid taxes on income generated through its AdWords service, because it does not have a permanent establishment in France, and its operations in that country are managed from Ireland.
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– We should not accept that companies operate in Europe while paying minimal amounts of tax into our national treasuries, the ministers wrote in the letter.
They insist that this is a matter of economic efficiency, as well as fairness and sovereignty.
French Minister Bruno Le Maire, German Wolfgang Schaeuble, Italian Pier-Carlo Padoan, and Spanish Luis de Guindos will present their proposal at an informal meeting of finance ministers in Tallinn from September 15-16.
Le Maire began advocating for this idea over the summer, although Germany was initially reluctant to embrace it. Schaeuble later joined his French colleague, followed by ministers Padoan and de Guindos.
The letter from the four ministers builds on last week’s Estonian proposal to tax internet companies where they make profits, rather than where they are registered.
The proposal prioritizes their digital presence over physical presence in countries.
Discussions on this issue have been initiated ahead of the digital summit in Tallinn on September 29, where EU leaders will discuss how the digital sector can support the EU economy in the long term.
The summit will also address issues such as innovation, internet security, e-governance, and taxation, writes the independent online portal EUobserver.
