The European Commissioner for Economic and Financial Affairs Pierre Moscovici made clear on Tuesday that the question of taxing US digital behemoths was one of “when” not “if.”
Moscovici stressed the urgency that is needed for digital companies to operate on a level playing field and pay taxes “where they make profits”, in reference to the 9% effective tax paid by digital companies to the 21% paid by so-called “traditional companies”.
The EU is bracing for a “unilateral action” by the US, though Brussels would prefer a coordinated effort. The Commissioner noted that Brussels is working with the Organisation for Economic Cooperation and Development (OECD), but there is little scope for optimism. The OECD will be putting forward its own recommendations by the end of March.
Paying taxes where companies operate rather than where they are headquartered, is a position that is fiercely resisted by a number of EU member states, including the Netherlands, Luxembourg, Ireland, and Malta.
Making his position clear, Moscovici said the Commission would be factoring in “user contribution” in the allocation of corporate tax revenue. The OECD’s Secretary General, Ángel Gurría, has called for all measures to be exercised “to avoid unilateral action”, including in Europe.