Taxation on online activity is still not decided. The E.U. Economic and Financial Affairs Council, which was to set the criteria for taxing the online giants that beautifully evade taxes throughout the continent, decided to postpone the discussion until Sept. 29, when the heads of state and government will meet in the Estonian capital, Tallinn, a few days after the German elections.
And the countries of northern Europe together with Ireland, Luxembourg and the Netherlands (which host the fictitious sites of multinationals in Europe) are the most cautious in dealing with this hot potato: Many online companies have huge investments in these latitudes and no one wants to put the stick in the wheels of Google, Facebook, Amazon and their peers.
The pressures from France and Italy were soon bounced back. So, the statements from Pier Carlo Padoan sounded derisive: “We think that this issue needs to be accelerated because it is mature now, we hope to make progress.” And a few hours they changed it to reverse.
And the French are even more frustrated. Starting with Macron, they fired the first shot by proposing the famous letter by the four ministers (in addition to Italy, Spain and Germany) that had put the web tax issue on Friday’s agenda. Economy Minister Bruno Le Maire tried to push the pill, arguing that “Austria, Bulgaria, Greece, Slovenia and Latvia also agree on the proposal.” But the postponement to the 29th proves that the opposition is still in the majority.
The excuse for not acting was a technicality: how to circumvent the so-called “stable organization” principle, which holds that only companies that have a consolidated organization can be taxed by a country. The digital companies only have a virtual presence or count on very few employees and offices. In this way, they can get away with not paying taxes on their businesses.
According to the data collected by the Dutch Socialist Representative Paul Tang, Google earned revenues for over €50 billion out of the E.U., which means at least €5 billion in lost taxes, against a tax paid in Ireland of 0.82 percent.
In Ireland, Facebook managed to reduce its taxes to a range between 0.03 and 0.10 percent, and if we add the “discount” secured by Google, the tax loss for the E.U. would be €1.8 billion a year.
In Italy, according to the figures from the Parliamentary Budget Office, Google only reports 0.3 percent of its total revenue and is taxed on this amount, while digital transactions in Italy represent only 2.4 percent of the total.
Facebook declares 0.1 and 2.8 percent, respectively.
Then there’s online advertising: In 2016, Google billed €82 billion and Facebook €33 billion. Out of this amount, the largest portion was taxed out of Italy.
According to the House Budget Committee, between €30 billion and €32 billion are subtracted from the tax base every year, with the consequent loss of €5 billion to €6 billion in taxes. A fortune lost to these tax maneuvers.