EU lawyers question European Commission’s digital tax plan

Republic strongly opposed to proposal as it stands

France's push for an EU-wide digital tax targeting the likes of Apple and Google has hit another potential stumbling block after Brussels lawyers questioned the legal route used to impose a "temporary levy" on tech giants.

Earlier this week, it emerged that the Republic has teamed up with the Czech Republic, Finland and Sweden to oppose the digital tax proposals from the European Commission, warning that they breach international treaty obligations.

A confidential legal opinion from the EU Council, seen by the Financial Times, has also now raised “serious doubts” about whether the commission’s plan for a 3 per cent levy on the biggest tech companies is compatible with the legal article under which has been proposed by Brussels.

It is the latest possible hurdle for the EU's digital tax plans which have been fiercely pushed by France's Emmanuel Macron - with the support of Spain and Austria - but has divided other member states.


The legal opinion says the digital turnover tax would not constitute an “indirect tax” on companies - raising doubts about the appropriateness of the legal basis under which it has been proposed.

Earlier this year, the commission revealed its proposal for a temporary levy targeting the revenues of around 120 of the biggest tech companies amid concerns about the low tax bills of digital giants. Fairer taxation on the likes of Facebook, Apple and Google has become a politically charged issue in the EU ahead of pan-European elections next May.

Stop gap measure

The “interim” levy is designed as a stop gap measure while international tax authorities in the Organisation for Economic Cooperation and Development (OECD) work out a global framework for taxing tech companies.

In response to the legal opinion, a spokesman for the commission said it was “convinced” the legal basis was appropriate and the levy did constitute a legitimate indirect tax on companies.

Euro zone finance ministers have been divided over whether the EU should come up with a temporary measure or wait for the OECD’s solutions. Any European digital tax would require unanimous support from all EU28 governments to come into force. – Copyright The Financial Times Limited 2018