The finance ministers of the largest EU countries want a change in how big internet get taxed, saying this should be based on revenue and not profit, EU Observer reported. France, Germany, Italy and Spain, the largest economies in the economic zone, have asked the Estonian EU presidency and the European Commission to design an “equalisation tax” on turnover, so that internet companies pay tax where they make money, rather than where they are registered.
"We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries," a letter signed by the finance ministers of the four countries said. They insist that the issue is a question of "economic efficiency," as well as justice and sovereignty. France's Bruno Le Maire, Germany's Wolfgang Schaeuble, Italy's Pier-Carlo Padoan and Spain's Luis de Guindos will present their proposal at an informal meeting of finance ministers in Tallinn later this week. The letter follows an Estonian proposal last week to tax internet companies in countries where they make profits, not only where they are registered.
At the moment, companies such as Google, Apple, Facebook and Amazon - the so-called Gafa - can pay minimal taxes in Europe thanks to subsidiaries in low tax rate countries like Ireland. Their profits are reported where the subsidiary is, even if revenues are generated in other countries. Earlier this year, French judges said that Google was not required to pay over EUR 1 billion in taxes on revenues made through its AdWords service, because it has no "permanent establishment" in France.
The discussions come ahead of a digital summit in Tallinn on 29 September, where EU leaders will discuss how the digital sector can boost the EU's economy in the long term. Questions of innovation, but also cybersecurity, e-governance and taxation will be on the table.
