Brussels is considering taxing big US tech companies through a broad levy on large corporations in an effort to raise revenues for the EU while avoiding a backlash from the Trump administration.
The European Commission was working on new ways to capture more income from tech groups such as Apple, Meta and Google without singling them out, six officials with knowledge of the discussions told the FT, after Washington threatened retaliation against countries that implement digital services levies.
The discussions come as EU countries are negotiating over the bloc’s shared budget and facing spending constraints at home, leading to demands for new centralised levies while global efforts to tax multinationals’ profits falter.
Brussels was considering changes to an existing proposal that would require all companies operating in the EU with revenue of more than €100mn a year to pay an annual lump-sum tax contribution, the officials said.
While in its current form the proposal, known as the “Corporate Resource for Europe” (Core), would oblige digital services companies with an EU subsidiary to pay the lump sum, it would only capture a relatively small slice of a multinational company’s earnings.
Adjusting the thresholds and contributions under the Core proposal to cover only very large corporates would both increase the amount raised from tech groups and defuse criticism in Europe that Core would hit many medium-sized European companies, officials argued.
The new tax would cover all types of companies, not just those specialising in digital services, but the specifics were still under discussion, officials said.
“Some [EU] capitals are opposed to a pure digital tax because they don’t want to upset the Americans, and many more are opposed to Core,” said one EU official. “The solution is to expand [the tax] to cover pretty much all the big companies.”
The Core tax is part of a group of five new levies or “own resources” that would collectively raise about €60bn a year for the EU’s common budget from 2028.
But it is fiercely opposed by a majority of EU countries that argue it would put a number of medium-sized European companies at a disadvantage compared with their foreign competitors.
Officials said that changing the thresholds to exclude medium-sized businesses would probably mean that a larger number of countries would back the tax. However, they cautioned that the move would require the agreement of all 27 EU countries. The Commission declined to comment.
Global efforts to tax big digital services companies have stalled in recent years. A 2021 agreement brokered by the OECD to oblige large multinationals to pay more tax in the countries where they generate sales hit a wall following US President Donald Trump’s re-election in 2024. An EU official described the deal as in effect “dead”.
Brussels had put on hold legislation for a bloc-wide digital services levy to allow for the global deal to be implemented, but it remains wary of any tax design that would single out digital groups.
Officials said such a tax would be unlikely to garner the necessary support from EU members due to fears of US retaliation.
The bloc has been walking a fine line since Trump’s re-election as it continues to enforce its landmark digital rules while avoiding escalating tensions with Washington.
France, Italy, Spain and Austria already have a national digital services levy and have been targeted by the US with Section 301 investigations, potentially leading to retaliatory trade tariffs.
CCIA, which represents several US Big Tech companies, declined to comment.
A Commission spokesperson said it was ready to support the EU Council and European parliament “in reaching an agreement on the new own resources package this year”, adding that the package was “essential to ensure the adequate financing of our joint priorities over the next decade”.
Posted by Desperate_Wear_1866
1 Comment
The European Commission is considering creating a digital tax on Big Tech, but also considering implementing it on medium sized European companies in order to avoid singling out American companies and therefore avoid American retaliation. This would raise an estimated €60bn a year, which would go directly to the common EU budget.
However, such an initiative would require the approval of all 27 member states. This looks unlikely due to concerns over competitiveness and American retaliation. The United States has already taken investigatory measures against France, Italy, Spain and Austria over their digital services levies.