Again and again it is announced that big internet companies which are located outside the EU like e.g. Google, Apple, Facebook and Amazon should pay taxes on their sales in the EU.
On average they pay less tax on their profits than other companies because they can choose the place of taxation in the EU.
A state can only tax a company if it has a permanent physical location there.
These Internet companies have such physical establishment only in exceptions and may benefit from special tax arrangements such as Apple in Ireland.
[1]
[2]
[3]
[4]
[5]
So these internet companies can shift their profits to where little or no taxes are required and benefit from the nature of their business. Since their products are digital they escape access by tax offices. But action at EU level have failed time and again. [1] [2] [3] [4] [5]
In two countries quite different individual approaches are developing. In March 2019 the French government is working on a digital tax for major Internet companies based outside the EU and for preventing its products from evasiding taxes. France does not want to wait for an international solution and levy a tax of 3 % of its digital turnover which is about 500 million euros annualy. [6] [7]
In Germany on the other hand the situation develops ambiguously. On the one hand the leading candidate of the European People's Party (EPP) Manfred Weber (CSU) still demands a digital tax for large Internet companies. Weber (CSU) believes that such a tax is necessary to create fairness in this new market. On the other hand finance officials work in the CSU-ruled Bavaria, which is the homestate of the Bavarian sister party of the CDU, on a approach for themself. [8] [9] [10] [11] [12]
Finance officials from Munich have now found a way even without a specific digital tax to levy taxes on the products of Internet companies. The tax officials involuntarily demand entrepreneurs to be tax collectors. For this purpose medium-sized companies from Munich, e.g. if they have advertised on Google, pay a withholding/retention tax of 15 % and retroactive to the years 2012 and 2013. According to the tax officials the companies could then retrieve these money from the Internet companies. [8] [9] [10] [11] [12]
With their project the tax officials are working to ensure that parts of the revenues of Internet companies remain in Germany. However it may be doubted whether medium-sized companies are able to make the Internet companies pay. And the practice has special weight since collecting taxes in Germany is a matter of the federal states. Other states could follow.
[1] Taxation of Digital Activities in the Single Market 2018-02-26
https://g8fip1kplyr33r3krz5b97d1-wpengine.netdna-ssl.com/wp-content/uploads/2018/02/taxation-of-digital-economy-2.pdf
[2] PLÄNE DER EU-KOMMISSION: Kommt jetzt die Google-Steuer? 2018-03-21
https://www.faz.net/aktuell/wirtschaft/diginomics/warum-die-eu-digitalsteuer-ein-heikles-vorhaben-ist-15503914.html
[3] EU-Plan gegen Facebook und Google - Warum eine Digitalsteuer Deutschland teuer kommt 12/2018
http://www.spiegel.de/spiegel/die-geplante-digitalsteuer-der-eu-kommission-koennte-deutschland-schaden-a-1198768.html
[4] EU states set to scrap digital tax plan, to work for global reform 2019-03-06
https://uk.reuters.com/article/us-eu-tax-digital/eu-states-set-to-scrap-digital-tax-plan-to-work-for-global-reform-idUKKCN1QN1WF
[5] EU-Kompromiss gescheitert - Vorerst keine Digitalsteuer in Europa 2019-03-12
https://www.tagesschau.de/wirtschaft/digitalsteuer-107.html
[6] GOOGLE, APPLE & CO.: Frankreich macht mit nationaler Digitalsteuer Ernst 2019-03-06
https://www.faz.net/aktuell/wirtschaft/frankreich-macht-mit-nationaler-digitalsteuer-ernst-16075310.html
[7] France to target online tech giants with digital tax 2019-03-06
https://www.france24.com/en/20190306-france-tax-gafa-internet-technology-giants-digital
[8] JAHRESTAGUNG WORLD ECONOMIC FORUM - Internetkonzerne befinden sich in der Vertrauenskrise 2019-01-18
https://www.handelsblatt.com/politik/international/davos2019/jahrestagung-world-economic-forum-internetkonzerne-befinden-sich-in-der-vertrauenskrise/23879082.html
[9] FACEBOOK. GOOGLE, AMAZON - CSU-Politiker halten an EU-Digitalsteuer fest 2019-01-21
https://www.handelsblatt.com/politik/deutschland/facebook-google-amazon-csu-politiker-halten-an-eu-digitalsteuer-fest/23892430.html
[10] DIGITALSTEUER - Mit diesem Trick versucht Bayern, Steuern von Google einzutreiben 2019-02-19
https://www.handelsblatt.com/politik/deutschland/digitalsteuer-mit-diesem-trick-versucht-bayern-steuern-von-google-einzutreiben/24013704.html
[11] GELD VON GOOGLE & CO: Bayern nutzt die Hintertür zur Digitalsteuer 2019-03-04
https://www.faz.net/aktuell/wirtschaft/diginomics/bayern-nutzt-die-hintertuer-zur-digitalsteuer-16071968.html
[12] KREATIVE FINANZÄMTER: Die Google-Steuer trifft die Falschen 2019-03-06
https://www.faz.net/aktuell/wirtschaft/diginomics/die-google-steuer-trifft-die-falschen-16073613.html
So these internet companies can shift their profits to where little or no taxes are required and benefit from the nature of their business. Since their products are digital they escape access by tax offices. But action at EU level have failed time and again. [1] [2] [3] [4] [5]
In two countries quite different individual approaches are developing. In March 2019 the French government is working on a digital tax for major Internet companies based outside the EU and for preventing its products from evasiding taxes. France does not want to wait for an international solution and levy a tax of 3 % of its digital turnover which is about 500 million euros annualy. [6] [7]
In Germany on the other hand the situation develops ambiguously. On the one hand the leading candidate of the European People's Party (EPP) Manfred Weber (CSU) still demands a digital tax for large Internet companies. Weber (CSU) believes that such a tax is necessary to create fairness in this new market. On the other hand finance officials work in the CSU-ruled Bavaria, which is the homestate of the Bavarian sister party of the CDU, on a approach for themself. [8] [9] [10] [11] [12]
Finance officials from Munich have now found a way even without a specific digital tax to levy taxes on the products of Internet companies. The tax officials involuntarily demand entrepreneurs to be tax collectors. For this purpose medium-sized companies from Munich, e.g. if they have advertised on Google, pay a withholding/retention tax of 15 % and retroactive to the years 2012 and 2013. According to the tax officials the companies could then retrieve these money from the Internet companies. [8] [9] [10] [11] [12]
With their project the tax officials are working to ensure that parts of the revenues of Internet companies remain in Germany. However it may be doubted whether medium-sized companies are able to make the Internet companies pay. And the practice has special weight since collecting taxes in Germany is a matter of the federal states. Other states could follow.
[1] Taxation of Digital Activities in the Single Market 2018-02-26
https://g8fip1kplyr33r3krz5b97d1-wpengine.netdna-ssl.com/wp-content/uploads/2018/02/taxation-of-digital-economy-2.pdf
[2] PLÄNE DER EU-KOMMISSION: Kommt jetzt die Google-Steuer? 2018-03-21
https://www.faz.net/aktuell/wirtschaft/diginomics/warum-die-eu-digitalsteuer-ein-heikles-vorhaben-ist-15503914.html
[3] EU-Plan gegen Facebook und Google - Warum eine Digitalsteuer Deutschland teuer kommt 12/2018
http://www.spiegel.de/spiegel/die-geplante-digitalsteuer-der-eu-kommission-koennte-deutschland-schaden-a-1198768.html
[4] EU states set to scrap digital tax plan, to work for global reform 2019-03-06
https://uk.reuters.com/article/us-eu-tax-digital/eu-states-set-to-scrap-digital-tax-plan-to-work-for-global-reform-idUKKCN1QN1WF
[5] EU-Kompromiss gescheitert - Vorerst keine Digitalsteuer in Europa 2019-03-12
https://www.tagesschau.de/wirtschaft/digitalsteuer-107.html
[6] GOOGLE, APPLE & CO.: Frankreich macht mit nationaler Digitalsteuer Ernst 2019-03-06
https://www.faz.net/aktuell/wirtschaft/frankreich-macht-mit-nationaler-digitalsteuer-ernst-16075310.html
[7] France to target online tech giants with digital tax 2019-03-06
https://www.france24.com/en/20190306-france-tax-gafa-internet-technology-giants-digital
[8] JAHRESTAGUNG WORLD ECONOMIC FORUM - Internetkonzerne befinden sich in der Vertrauenskrise 2019-01-18
https://www.handelsblatt.com/politik/international/davos2019/jahrestagung-world-economic-forum-internetkonzerne-befinden-sich-in-der-vertrauenskrise/23879082.html
[9] FACEBOOK. GOOGLE, AMAZON - CSU-Politiker halten an EU-Digitalsteuer fest 2019-01-21
https://www.handelsblatt.com/politik/deutschland/facebook-google-amazon-csu-politiker-halten-an-eu-digitalsteuer-fest/23892430.html
[10] DIGITALSTEUER - Mit diesem Trick versucht Bayern, Steuern von Google einzutreiben 2019-02-19
https://www.handelsblatt.com/politik/deutschland/digitalsteuer-mit-diesem-trick-versucht-bayern-steuern-von-google-einzutreiben/24013704.html
[11] GELD VON GOOGLE & CO: Bayern nutzt die Hintertür zur Digitalsteuer 2019-03-04
https://www.faz.net/aktuell/wirtschaft/diginomics/bayern-nutzt-die-hintertuer-zur-digitalsteuer-16071968.html
[12] KREATIVE FINANZÄMTER: Die Google-Steuer trifft die Falschen 2019-03-06
https://www.faz.net/aktuell/wirtschaft/diginomics/die-google-steuer-trifft-die-falschen-16073613.html