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Bloomberg
France and Germany agreed to a compromise proposal on how to tax large tech companies that scales back the broad plan initially envisioned by Paris, according to a joint statement issued in the early hours of Tuesday.
The new proposal would only tax the European advertising revenue of digital companies at 3 percent, rather than a wider base encompassing data sales, according to the statement. The duty would generate about half the revenue previously planned and mainly hit Alphabet Inc’s Google and Facebook Inc, wh-ich dominate the online ad market, according to an official with knowledge of the matter.
While the Fran-co-German deal marks a compromise 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.
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 end of February, an EU diplomat said. France and Germany said the watered-down proposal doesn’t prevent countries wishing to impose the levy on a broader revenue base to do so. The compromise is a blow to French President Emmanuel Macron’s broader plans to reform euro area. France has held up the digital tax as an opportunity to show voters ahead of EU elections in May that establishment parties are capable of action to make global corporations contribute a fair share to public coffers.
In a bid to get a deal, France has repeatedly made concessions to try and get Germany on board with the plans. At a meeting a month ago, French Finance Minister Bruno Le Maire agreed to be more flexible on the implementation date of the European tax by having it as a fallback option if international efforts didn’t get results. Tuesday’s statement says the new levy will enter into force in January 2021, unless if rich nations at the Organisation for Economic Co-Operation and Development reach consensus on a global approach by then, according to the statement.