Threats to imposing taxes on digital services of large American technology companies such as Alphabet, Amazon, Apple, Meta and Microsoft, its head has launched European committee, Ursula von der Layenafter the storm of Trump duties.
According to a report by Ertnews, diplomats said that von der Laene’s move to target technology giants is not as good as a good idea, and most European capitals are publicly supporting her in an effort to strengthen their joint stance in the negotiations with Washington. At the same time, EU countries such as Germany and Ireland are already silenced the committee’s threats, while in the background others are worried.
Among the concerns is that new contributions to digital services would be more affected by European businessmen than Silicon Valley’s technology tycoons and that escalating a trade war could irreparably harm EU economies, according to Ertnews.
Politico mentions five important reasons why von der Laene’s threat is – at least for the time being – more tobacco than substance.
There is no alternative
German politicians often used the expression of Tina (“there is no alternative” – there is no alternative) to sell painful spending cuts in the south – and Greece – during the crisis.
They now use the same logic to warn against digital taxes. The argument is that Europeans will continue to rely on large American technology companies such as Facebook or Google for their advertising, because there is no viable alternative to Europe.
“If you look at the data centers, if you look at cloud services, if you look at artificial intelligence applications, unfortunately, there are simply insufficient alternatives to the US digital industry,” said German Finance Minister Yorgis Koukis last week. An EU move to hurt US technology companies would immediately return to European businesses and buyers.
The comments have bothered European Central Bank President Christine Lagarde, who accused Kukis of undermining EU unity for negotiations during a closed doors of EU finance ministers in Warsaw, three European officials.
But in reality many experts agree with Koukis’ argument. “It is difficult to impose such measures without hurting EU consumers or businesses too,” said Berin Martens of the Bruegel thought tank.
There is no tested way to apply the
Adopting a tax for digital services is a real minefield from a legal point of view. To date, efforts to implement a General Digital Services tax on companies’ revenue has failed miserably, because the change in tax policy requires unanimity between the 27 EU countries.
To avoid this, von der Laen has suggested that digital services and advertising revenue could be targeted by the so -called “commercial bazooka” -the anti -compulsion regulation (ACI) -which has never been implemented to date.
ACI, however, cannot be used against companies with a strong presence in Europe, Martens said. Most American digital giants are registered in EU countries such as Ireland (Apple, Microsoft, Google, Meta) or Luxembourg (Amazon).
Ireland’s contrast
Ireland has a lot to lose to technology companies and has already publicly defied the Commission’s initiative.
Irish Prime Minister Michael Martin said the weekend that his country would resist the committee’s proposals and that the placement of a new tax in addition to the strict EU Big Tech regulation would “put oil on fire”.
Ireland is among European countries that are more exposed to trade war with the US because it hosts subsidiaries of US digital giants and also exported medicinal products worth more than 44 billion euros in the US in 2024.
“Ireland has an highly concentrated corporate tax base, which largely depends on US multinationals,” Eyanan Reagan, a professor of political economy at the University College in Dublin, said in an interview.
Ten companies represent 60 percent of Ireland’s corporate tax revenue and about 30 percent of its total tax revenue now comes from the corporate sector, Ragan explains.
The World Tax Agreement
The US has given the last days to the Economic Co -operation and Development Organization that they want to reopen the discussions on a global tax agreement.
Washington has never signed the part of the agreement aimed at force Big Tech groups and multinationals to pay more taxes in the countries where their customers are based, which means that this part of the agreement has not yet been ratified.
The threat of von der Laienne to impose new taxes – beyond those already imposed by individual EU countries – can push Washington to look for a global solution.
Escalation
Big tech taxation threats are intended to bring Trump to the negotiating table and encourage a trade agreement. But many skeptics are afraid that things could go differently. Digital taxes can cause a US reaction, which can turn into a complete trade war. This will hit growth throughout the Old Epirus and especially in countries such as Germany and Italy that are largely dependent on exports to the US.
The ECB estimates that US unilateral duties would hit the eurozone growth rate of 0.3 percentage points in the first year.
Von der Laen knows all this and this week she seems to have mitigated her rhetoric.