The ECOFIN ministers met today, and took stock of a new proposal tabled by France and Germany.
Background: The European Commission introduced proposal for digital taxation back in March 2018. This included a permanent tax on businesses of at least €7m turnover, or 100k users, or 3k contracts per year in an EU country; and an interim tax to be applied while the permanent one was finalised. Member states have been divided over the plan, due to diverging interests and widely differing tax rates.
What’s new? Today’s meeting of the ECOFIN ministers within the Council saw a new proposal, tabled by Germany and France. This is less ambitious than the previous one: will only relate to advertising revenues for firms with a worldwide turnover of at least €750m, and with taxable revenues within the EU of at least €50m. There is also a sunset date, currently not specified, or a clause to make the tax expire once a framework is agreed at OECD level.
What to expect now: Member states will need time to analyse the details. However, the debate today already showed this proposal, like the previous one, will face significant obstacles. Several member states have repeated they would like to leave it to the OECD to take care of the matter; others have signalled the risks of inconsistency in the proposal, which leaves member states room to introduce their own tax; and even those who were in favour of the initial proposal now wonder if there is any point discussing the new one, which would likely rise much less money (around €0.8bn according to estimates of the EC). Ministers are aiming to reach an agreement by March, but this is likely to be a very ambitious objective.
