Taxation for large tech companies - EU monitor

EU monitor
Thursday, February 27, 2020
Source: P.J.G. (Paul) Tang i, published on Thursday, April 25 2019, 2:47.

The Dutch Labour Party (PvdA) introduces a tax for large tech companies in the Netherlands. The party is submitting an initiative bill today for a national tax on the digital revenue of technology companies such as Google and Facebook. The proposal would apply to companies that sell at least 25 million in services and products in the Netherlands and have a worldwide turnover of at least 750 million. It follows after the negotiations on a European Digital Service Tax at the EU level haven broken down in March of this year. The inititiative has the explicit support of the Eurocommissioner Pierre Moscovici.

Many of the tech giants have no physical presence in the Netherlands and use this to avoid coorporate taxation. The profit is often passed on to countries with low tax rates. The PvdA wants to get rid of this competitive advantage that digital companies have. Tech companies would pay 5 percent tax on their digital revenue in the Netherlands.

“We must be sure that everyone makes a fair contribution to society,” said MP Nijboer and MEP Paul Tang. “That means that digital multinationals must also do their bit.”

The PvdA wants, among other things, to levy taxes on income from digital advertisements, online trading platforms, streaming services and the sale of user data. This would make companies such as eBay, Google, Facebook and Spotify a target of the new tax rate.

The initiative should also put pressure on international and European discussions for reform of the corporate tax system. If these discussion don’t bear fruit, the result could be a mix of national approaches

The bill borrows from the work done by the European Commission and the European Parliament where Paul Tang is rapporteur for the DST. This initiative bill puts the Netherlands on a growing list of Member States that are working on a tax on digital services. France, Austria, Italy and Spain among others, are working on similar legislative proposals for a national digital service tax.