Success for Trump: EU Commission wants to remove digital tax from budget plan

The EU Commission has apparently dropped its plan to levy a tax on large digital companies. The Brussels government institution has removed the option of such a levy from its list of proposed taxes to generate revenue in the next seven-year budget framework, Politico reports, citing a document that has been circulating since Friday.

With the potential withdrawal, the Commission apparently wanted to send a signal in the final phase of negotiations on a trade agreement to avoid high tariffs between the EU and the US. US President Donald Trump and US technology giants such as Amazon, Apple, Google and Meta would thus achieve a victory. Trump threatened Canada with tariffs in retaliation for the digital tax that was considered there but recently overturned. On Thursday, he announced flat-rate levies of 35% against the neighboring country. On Saturday, he also sent a letter to the EU in which he announced tariffs of 30 percent on products delivered to the United States from August 1. The EU had hoped for a rudimentary agreement of 10 percent.

Just days before the budget is presented, senior EU officials are in last-minute talks to decide which levies will be included in the Commission's proposal for the multi-annual budget from 2028, according to Politico. The draft is to be officially published on Wednesday. According to the report, the current status of the document contains a list of possible taxes. However, it does not yet quantify how much money each of these levies is likely to raise. The document could still be revised before it is published, especially in light of Trump's tariff decision.

German debate on "platform soli"

The decision against a digital levy would be a U-turn by the Brussels executive, which only in May brought the taxation of tech giants into play as a way of paying off debt. The idea was included in an early draft of the next budget framework discussed by the Commission. If the initiative is actually scrapped, this should also put an end to the local debate on a digital tax, aka "platform soli". To date, this has always referred to a joint European approach.

According to Friday's document, the EU wants to propose three other new taxes aimed at electronic waste, tobacco products and large companies in the EU with a turnover of over 50 million euros. This should raise 25 to 30 billion euros annually. These are mainly intended to pay off debts from the coronavirus aid fund. However, Italy, Greece and Romania reject new taxes on e-cigarettes and vapes. A CO2 border tax is also still under discussion, which provides for member states to participate in the revenue from the Emissions Trading System (ETS). The national governments must unanimously approve the draft budget following its publication.

(nie)