Germany backs France on tax plan
German finance minister Olaf Scholz says that he favours getting a binding deal on an EU digital tax at a meeting of EU finance ministers in December and that he supports the French model for the move.
German finance minister Olaf Scholz says he favours getting a binding deal on an EU digital tax at a meeting of EU finance ministers in December, and that he supports the French model for the move.
France has long been the main supporter of the tax, but has grown increasingly frustrated with German hesitation over the details after Berlin agreed in principle to the idea in June.
“If the negotiations continue the way that they have been going, we’ll still be in talks in 100 years. That is why I support the French model and want to offer the proceeds to the EU,” news weekly Der Spiegel quoted Scholz on Monday as saying.
After months of tough lobbying, the French government has said that only Denmark, Sweden and Ireland remain opposed.
Germany had until now been wavering over the proposed EU plan to tax big internet firms such as Google and Facebook on their turnover, which EU officials say unfairly pay less tax than other companies. Earlier in November, Germany called for a revision of the plan that would exclude from the proposed tax activities linked to carmakers, which Paris has assured would not be covered.
In a significant concession, French finance minister Bruno Le Maire agreed last week to delay the implementation of the tax until the end of 2020 and only if a global deal is not reached on the issue beforehand. Le Maire said on Friday Germany’s failure to back the proposed tax at a December 4 EU finance ministers meeting would trigger a breakdown of trust between the countries.
French President Emmanuel Macron has staked considerable political capital on the tax, part of his broader vision for closer eurozone integration.
The digital levy is also seen in Paris as a useful example of joint European action before EU parliamentary elections in 2019.
Under a proposal from the EU’s executive commission in March, EU states would charge a 3% levy on the digital revenues of large companies that are accused of averting tax by routing their profits to the bloc’s low-tax states.
The plan is aimed at changing tax rules that have let some of the world’s biggest companies pay unusually low rates of corporate tax on their earnings. But it requires the support of all 28 EU states and is opposed by a number of them, including small, low-tax countries such as Ireland that have benefited by allowing multinationals to book profits there on digital sales to customers elsewhere.
The French government and European Commission have said big internet companies such as Google and Facebook are not paying their fair share under existing tax rules, to which companies respond that they are fully in line with the rules.