The European Commission’s controversial proposals are for large digital companies with significant revenues in Europe such as Apple, Facebook and Google to pay a three percent tax on their turnover on various online services in the European Union, raising around €5bn annually.
This tax would apply to firms with annual global revenue of above €750million and annual “taxable” EU revenues above €50m.
The plan would target the advertising revenues, subscription fees and sales of personal data for such companies.
Some 150 digital firms would face the tax and according to the commission’s estimates, half are from the US and a third are European.
The proposals have been championed by Mr Macron, who has made raising taxes from digital companies a key part of his plans to address growing public anger over the low tax bills of global technology firms.
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Brussels’ proposals would require the full backing from the European Parliament and the 28 EU countries but they face opposition from low tax member states such as Ireland and Luxembourg, while the Netherlands, Denmark and Finland are all pushing for international rules instead.
Ahead of the EU Summit in the Belgian capital today, Irish Prime Minister Leo Varadkar told his parliament that the European Commission’s plans were “ill-judged”.
Mr Varadkar added: “It is important to emphasise that Ireland is committed to global tax reform.
“However, we are very much for the view that global solutions are needed.”
Germany has cooled on the plans and has expressed scepticism about the principle of narrowing levies targeting digital earnings.
A German official told the Financial Times: “The fact that the big digital companies are American doesn’t make things any easier, especially in the current environment.
“We think this is a difficult technical issue, but it is a highly political one and this is why (EU leaders should) openly discuss it.”
Berlin is also worried that a shift towards taxing consumption rather than production could impact on lucrative German car companies as they drive towards data-dependent smart cars over the coming years.
But yesterday, the UK, France, Germany, Italy and Spain backed a co-ordinated EU-wide approach in the absence of a broader global consensus.
A joint statement said: “We continue to support the EU’s ongoing work and hope it provides an impulse for the discussions at the G20/OECD level, while at the same time providing a basis for co-co-ordinated EU action to effectively align the taxation of highly-digitalised business profits with the place where value is created.”