EU leaders met on Friday (September 29th) in Tallinn (Estonia) on the occasion of the First European Summit on the Digital Economy.
One of the subjects under discussion was a new taxation of Internet giants initiated by France and supported by 19 EU countries including Germany, Italy, Greece and Spain.
This new tax, which would concern "GAFA" (Google, Apple, Facebook and Amazon), regularly accused of tax optimisation activities in Europe, would be based on their turnover in each country and not on profits housed in subsidiaries in low tax jurisdictions as is currently the case.
While French President Emmanuel Macron reaffirmed the need for "ambitious regulation" which "must be part of the digital single market", four EU countries opposed the new taxation of GAFA: Ireland, Luxembourg, Malta and Cyprus.
These countries are home to some of the European headquarters of tech giants, who benefit from low tax rates.
This is what Irish Prime Minister Leo Varadkar said at the Tallinn summit:
"If we want Europe to become digital, the solution will not arrive through more taxes and rules. People are complaining that there is no European Google, European Facebook but personally I think if you want this to happen in Europe (...) you will not succeed "with stronger regulation".
The same ppposition came from Luxembourg. Its Prime Minister Xavier Bettel, quoted by the newspaper Les Echos, said:
"I agree with 90% of Emmanuel Macron's proposals for Europe, but that on digital taxation is problematic. It is not a European subject, but a global issue, without which we will just make Europe is less competitive. Luxembourg is open to discussion on digital taxation, but within the framework of the OECD, and then taxing profits rather than turnover. "
The idea of reform in the OECD - made difficult by the reluctance of the United States - is also supported by the Netherlands, who believe that Emmanuel Macron's proposal seems legally unsound and inappropriate for the economic models of the tech giants, Les Echos reports.
The decisions of the European Union on taxation require the unanimity of all Member States, but the European Commission recently raised the possibility of depriving Member States of their right of veto on the basis of an article in the European treaties permitting such exceptions in the event of market distortions.
At the end of this First European Summit on the Digital Economy, the European Commission announced that it would propose new rules in 2018 in order to better tax the digital giants operating on European soil.
"We believe that in the digital sector, taxes should be paid where they are due," said Commission President Jean-Claude Juncker.
According to an MEP's report on a reform of taxation, the EU has lost 5.4 billion euros in taxes from Google and Facebook between 2013 and 2015 due to their tax optimisation measures.
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