Pierre Moscovici, the EU Tax Commissioner, warned a tech industry conference on Tuesday (20 February) that he is determined to introduce new legislation to tax digital companies next month.
“I know this will raise some eyebrows in this audience. It is happening,” Moscovici said, speaking at a conference about SMEs that was organised by Brussels lobby group DigitalEurope.
The EU tax chief addressed a roomful of conference attendees from some companies that are likely to be affected by the legislation. Other speakers at the event represented multinational firms like Google, Microsoft and Intel.
“Digital taxation is no longer a question of ‘if’ – this ship has sailed,” Moscovici added. The European Commission’s announcement of the proposal is scheduled for 21 March.
The French Commissioner, who is from the Socialist Party, told conference attendees that there is a “deep schism between where digital profits are generated and where they are taxed, if at all”.
He pointed out that tech giants’ revenue has boomed—and taxation has not followed. Average annual revenue growth for “the top digital firms” has hovered around 14% since 2011, compared to a growth rate of 0.2% for other multinationals and 3% for IT and telecoms firms, he said.
Moscovici repeated his commitment to working with the OECD on an international solution, although that will take longer to negotiate. But he insisted that the March proposal, which he described as a “simple stopgap measure at EU-level”, is needed to calm member states’ growing concerns about international tech companies’ tax payments.
Those concerns are “now shared at the highest political level in many European governments”, Moscovici said.
France, Germany, Spain and Italy led the call for legislation last year, and have picked up support from other member states.
But a handful of countries led by Ireland and Luxembourg have pushed back against the Commissioner’s plans. All member states must agree unanimously on any legal change to EU tax law.