Europe's Tech Tax Plan Limps on With Franco-German Agreement

Europe’s efforts to tax large tech companies were kept on life-support as France and Germany proposed a final-hour compromise that scales back the broad plan initially envisioned by Paris, according to Bloomberg.

The new proposal would only tax the European advertising revenue of digital companies at 3 percent, rather than a wider base encompassing data sales and marketplace sites. The duty would generate about half the revenue previously planned and mainly hit Google and Facebook, which dominate the online ad market.

“Like any European compromise, some will be disappointed. They’ll say it’s not enough and I can understand them,“ France’s finance minister Bruno Le Maire said. While the Franco-German deal marks a breakthrough after months of wrangling, it doesn’t guarantee that the tax will become law. Several countries including Sweden and Ireland have indicated they’re unlikely to support the measure, which requires unanimous support to come into force as EU-wide legislation.

Finance ministers from reluctant countries didn’t give their backing to narrowed Franco-German plan at a meeting in Brussels, but said they wouldn’t stand in the way of further talks. “I promise to be constructive and I’m ready to look at the proposal, but I still have serious concerns with it,“ said Finnish Finance Minister Petteri Orpo.

A draft of the new proposal will presented by the European Commission in the coming weeks and the EU will vote on the measure before the end of February, an EU diplomat said. France and Germany said that the watered-down proposal doesn’t prevent countries wishing to impose the levy on a broader revenue base to do so. “The Franco-German proposal offers a possible path and I think we should take it,“ said Pierre Moscovici, the European Commission’s taxation chief.