Germany, France, Italy, Spain seek new European Union tax on digital firm revenue

Google has filed an appeal to the European Commission over its €2.4bn antitrust penalty

Tech giants like Google or Amazon might end up paying a lot more tax in Europe, if a new European Union initiative goes through. The finance ministers of all four countries have called for higher taxation in a joint letter. Cut-rate corporate tax rates are a way for those countries to attract revenue, though the end result is that large, profitable tech giants and other multinationals are able to pay next to nothing or even nothing in taxes in some of their markets.

For years, United States tech companies have used creative accounting and tax incentives offered by Ireland to pay tiny amounts of tax across Europe, infuriating finance ministers and even the Bank of England, whose governor complained in 2015 that technology companies were among the worst offenders for tax avoidance. The letter follows an Estonian proposal last week to tax internet companies in countries where they make profits, not only where they are registered.

They urged the Commission to come up with a solution creating an "equalization tax" on turnover that would bring taxation to the level of corporate tax in the country where the revenue was earned.

Currently, EU treaties require tax proposals to have the unanimous support of all member countries, meaning any such measure would need to win over the countries doing the tax sheltering, like Luxembourg and Ireland.

Le Maire, Schaeuble, Padoan and de Guindos of Spain said they wanted to present the issue to other European Union counterparts at a September 15-16 meeting in Tallinn.

A French court ruled in July French court ruled that Google, now part of Alphabet Inc, was not liable to pay 1.1 billion euros ($1.3 billion) in back taxes because it had no "permanent establishment" in France and ran its operations there from Ireland. "If Commission decides to promote a legislative initiative on matter, we will demonstrate our commitment to tax adequately to companies of digital economy in a way that reflects its true activity in EU", judged by ministers.

Newly elected French President Emmanuel Macron promised to get tough on US Internet giants during his campaign earlier this year, seeing their low tax rates as a source of resentment about globalisation and unfair to European companies.

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