EU, Germany Propose New Tax On Tech Companies

But will it remain temporary?

For decades, wealthy businesses and their owners have relied on offshore accounts and registering companies in places like the Cayman Islands in order to avoid paying their fair share of taxes, and the tech industry is no exception.

With companies like Amazon, Facebook, Apple, Google, and many others setting up their headquarters in the EU to avoid paying higher taxes in other countries and in order to avoid sales taxes, it’s a wonder there’s enough revenue coming in for area governments to meet their budgets.

But that may change.

The EU and more recently Germany have received widespread member-nation support for a new tax on tech companies, specifically aimed at Google and its cohorts.

According to Engadget, “Germany’s call comes as Europe is considering an interim tax on revenue generated by digital companies within the European Union. Under the plan, firms earning at least €750 million globally and €50 million inside the EU per year would be subject to a three percent tax until a more long-term solution was put into place. While Germany was a strong backer of the interim tax initially, it has since called for debate on the plan.”

Currently, Luxembourg is one of those safe-havens for major international corporations.

With a population of just under 600,000 people, the country still lays claim to the European headquarters for more than 300 different multinational companies, some of which may be little more than a postal box. A tax such as this one would render that kind of financial protection pretty much useless.

This tax, of course, is meant to be temporary until a permanent and viable tax structure can be established and put into action. As with other taxes through history, though, it might be hard to let go of that revenue stream once it pours in. As part of the proposal, a firm end date for this tech tax has already been factored in.