In a joint letter, the finance ministers of Germany, France, Spain, and Italy want digital supergiants like Google and Amazon to be taxed in Europe based on their revenues, not only their profits.
France is leading the movement to clamp down taxation of businesses but has received support from other countries which are also disappointed at the low tax that they receive under the current international rules.
Presently, even though the revenue of such came from other EU countries, they are usually taxed on profits booked by subsidiaries in countries with low taxes.
“We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries,” wrote the four ministers in a letter seen by Reuters.
The letter, signed by Wolfgang Schaeuble of Germany, French Finance Minister Bruno Le Maire, Luis de Guindos of Spain, and Pier-Carlo Padoan of Italy, was addressed to the European Union’s Estonian presidency with the Executive Commission of the bloc in copy.
They requested the Commission to come up with a solution forming an “equalisation tax” on turnover that would bear taxation to the level of corporate tax in the country where the revenue was obtained.
“The amounts raised would aim to reflect some of what these companies should be paying in terms of corporate tax,” said the ministers in the letter which was first reported on by the Financial Times.
Schaeuble, Le Maire, de Guindos, and Padoan stated that they wanted to discuss the issue with other European Union counterparts at a September 15-16 meeting in Tallinn.
The European Union’s current Estonian presidency has scheduled a discussion at the meeting regarding the concept of “permanent establishment,” with the intention of making it possible to tax firms not only where they have their tax residence, but also where they create value, not only where they have their tax residence.
After facing legal setbacks trying to collect payments for taxes on operations in the country, France has stepped up pressure for tax rules in the European Union.
In July, A French court ruled that Google, which is now a part of Alphabet Inc, was not liable to pay 1.10 billion euros ($1.3 billion) in back taxes since it had no “permanent establishment” in the country and worked its operations in France from Ireland.