Ireland given boost in EU digital tax scheme battle as proposals on verge of collapse

Sweden and Denmark back bid to block ‘Google tax’ as Germany pushes for delay to controversial proposals

FRENCH-LED plans to tax big internet firms like Google and Facebook on their turnover are on the verge of collapse after other member states rejected them and announced national initiatives instead.

That’s a boost for Ireland which has opposed the plan, amid fears from Revenue that it could cost the Exchequer as much as €160m a year.

Under the proposal, a 3pc levy would be put in place on digital revenues of large tech firms.

They would be able to write it off against corporation tax – which could hurt Ireland as many of the companies are based here.

The plan is aimed at changing tax rules that have let some of the world’s biggest companies pay unusually low rates of tax on their earnings. But it requires the support of all 28 EU states and is opposed by Ireland, Sweden and Denmark. At a meeting of European finance ministers yesterday Germany urged for the first time a revision that would exclude activities that could be linked to carmakers. German Finance Minister Olaf Scholz also said the tax should not be applied until the summer of 2020, and only if no global deal was reached on the same issue. Work on the matter is ongoing at the Organisation for Co-operation and Development (OECD).

Irish Finance Minister Paschal Donohoe has consistently said he believes that is the right forum for reforming multinational tax. He told reporters yesterday that he thought a “different solution” to the EU’s plan would emerge from OECD.

France’s Finance Minister Bruno Le Maire, who has long been the main supporter of the tax, accepted delaying its implementation to the end of 2020, a major concession. But he said the EU should still reach agreement on the issue by the end of this year, to avoid states applying their own national taxes, in moves he said would harm the EU single market.

Spain and Britain have announced their own national plans to tax digital companies, and reiterated their intention to move ahead without waiting for an EU deal.

The Italian finance minister Giovanni Tria said Italy would also proceed alone if no EU agreement was reached by the end of the year.

Austria, which holds the rotating EU presidency, said it will make its last attempt for an agreement at a meeting of finance ministers in December, but that divisions now appeared to be so deep that chances for a deal had narrowed considerably.

“It is very difficult to see an agreement on the digital tax because so many technical issues are not solved yet,” Danish Finance Minister Kristian Jensen said.

Revenue feared EU plan would cost Ireland up to €160m a year