Tech's tax bombshell: Internet giants face billions more in taxes in Europe as regulators demand 'justice'

  • Lawmakers in Europe are preparing to clobber big tech firms like Amazon, Facebook, and Google with new tax bills.
  • Most recently, France on Wednesday unveiled plans for a tax on big-tech revenue that it said would raise about €500 million, or $US565 million, a year.
  • It follows similar plans in the UK, which last year said it was introducing a tech tax that could raise up to £400 million, or $US510 million, a year starting in 2020.
  • The European Union has been working on drafting similar international legislation, though talks stalled late last year.

Big tech companies including Facebook, Google, and Amazon could start paying billions more in tax in Europe as lawmakers demand they contribute more to the public purse.

France has joined the UK in setting out plans to tax internet giants on the revenue they make locally. It says the 3% tax could initially raise about €500 million, or $US565 million, but this number could rise quickly.

France’s finance minister, Bruno le Maire, unveiled the plan Wednesday. It would tax digital companies with global revenue over €750 million ($US848 million) and French revenue of over €25 million ($US28 million).

Le Maire said the tax was about “justice.” “These digital giants use our personal data, make huge profits out of these data,” and “then transfer the money somewhere else without paying their fair amount of taxes,” he said.

When asked in an interview with the radio station Europe 1 whether €500 million was a small figure, Le Maire said it was “a starting point.”

France is expected to move quickly to introduce the tax, the Associated Press reported, as President Emmanuel Macron’s party has a majority in the French Parliament.

Philip HammondGettyBritish Chancellor Philip Hammond.

If France does become the first European country to put in place such a tax, Britain could be close behind. In October, Chancellor Philip Hammond said the UK would tax 2% of British user-generated revenue in a new “Digital Services tax.”

Read more:
Here’s how the UK plans to seize $US2 billion in tax from firms like Amazon, Facebook, and Google

Hammond estimated that this would bring in up to £400 million, or $US510 million, a year for the Treasury, starting in 2020. The British government has just concluded a consultation on the proposals.

Combined, the UK and French taxes would raise just under $US1.1 billion from mainly US tech firms.

The UK said its Digital Services tax was an “interim measure” until the European Union could construct its own tax on international tech giants. In late November, a proposed EU digital tax was blocked by Ireland, Sweden, Denmark, and Germany.

Le Maire has been vocal about pushing through EU legislation, and he told the French newspaper Le Journal de Dimanche in January that a European agreement was “within reach.”

He told Europe 1 this week that he was optimistic other countries would follow France’s lead. “This tax we’re making at a national level,” he said. “I hope that next, it will become an international tax, and that all developed countries could adopt the idea.”

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.