Greece is among ten countries which have signed a statement calling on the European Commission to examine the feasibility of the so-called equalization tax, a tax of large internet companies on their turnover in each EU state, rather than their profits, proposed by France.
The letter – signed by the finance ministers of Italy, Spain, Greece, Portugal, Bulgaria, Slovenia, Romania, Austria, France, and Germany – proposes internet companies should pay a tax on their turnover that would “reflect some of what these companies should be paying in terms of corporation tax”.
France wants to tax companies like Google and Facebook on their turnover, rather than profits, to increase revenue from global online groups, accused of paying too little in Europe.
The French plan was seen as a “quick fix” to address the issue, but European officials acknowledged it may have some drawbacks. It could be easily exposed to legal challenges, divide the EU and cause trouble with the United States, home to most major online companies, they said.
Six countries opposed the idea, while the rest say there is a problem, but question if equalization tax is the way to deal with it. According to one diplomat, the strongest level of opposition came from Ireland, Malta, and Cyprus.
Luxembourg was said to have raised a series of practical problems about the proposal, arguing it would introduce a lot of complexity into the tax system.
Others, including the UK, argued caution, as the proposal could antagonize other non-EU countries, in particular, the United States, and urged continuing work through the G20 and OECD process to reform the global corporation tax regime.