Brussels wants tougher tax rules for internet giants

Brussels wants tougher tax rules for internet giants

Internet companies such as google and facebook are to pay significantly more taxes in europe in the future according to the will of the eu commission.

In the future, taxes will primarily be levied where the users are located and where online revenues are generated, the brussels authorities announced on wednesday. However, the EU member states still had to approve the advances before they could come into force.

The EU commission and a number of EU countries have been complaining for some time that digital companies such as google and facebook have significant revenues and profits in europe, but pay little tax because they do not have taxable headquarters in most countries. They are also bundling their activities in countries with low tax rates. Facebook has its international headquarters in ireland, for example.

The brussels authorities are now calling for new corporate tax rules in europe. The aim is to make it possible for EU countries to tax profits generated by them even without the physical presence of a company. In the control system are to be introduced for this purpose "digital operating stations". As soon as a company in a country has about more than 100.000 online users or generates more than seven million euros in a year, it is considered a digital prasent and had to file a tax return.

However, a number of countries – including germany and france – had demanded other measures from brussel. In the short term, companies with annual global sales of at least 750 million euros and online sales of 50 million euros within the EU will be subject to a three percent income tax.

The tax should also be paid in the country where the users are based. This is intended, among other things, to record the revenue from the sale of personalized advertising space and from the sale of user data. According to estimates, this meant that five billion euros more per year went into the public coffers in europe.

"Our pre-internet aa rules do not allow member states to tax digital companies operating in europe if they have little or no physical presence here," said eu economic affairs commissioner pierre moscovici. On average, traditional industrial companies pay about 23 percent in taxes, while digital companies pay only 9 percent.

The federal finance ministry buried the proposal, according to a spokesman in berlin. "At the same time, we continue to pursue broad international coordination."At the G20 level of the most important economic powers, there has been no consensus so far, and there is resistance from the USA in particular. "That’s why we need to move forward at EU level."However, this is considered questionable. EU tax policy is a minefield, as all countries must agree to it.

The ideas were also received positively in the european parliament. "We need a corporate tax code that meets the challenges of the 21. The CSU’s financial expert markus ferber said: "I’m convinced that the tax system of the twenty-first century is the right one. "No more tax-free pass for google, facebook and co," said SPD european deputy peter simon.

"The special tax on sales of digital corporations is not a permanent solution. Resourceful tax advisors will take advantage of the difficult distinction between digital revenues and other revenues and conduct virtual business outside the european union. In order to effectively prevent tax evasion, we must adapt the concept of a taxable entity to the digital age," said sven giegold, a member of parliament for the green party.