Germany Mulls Digital Tax On Tech Giants

Germany is considering introducing its own ‘digital tax’ on tech giants such as Facebook, Google and Amazon.

The country is considering the following the lead of France and the UK, by introducing a tax on the revenues that tech firms generate from online advertising.

It comes amid an ongoing debate as to whether tech firms are paying their fair share of tax, and whether countries are right to tax these firms, which often are headquartered in overseas territories.

German tax

According to a German media report, the German government is currently evaluating its options here as it currently has no powers to tax firms based aboard.

Reuters reported, citing an article in the Wirtschaftswoche magazine, that Germany’s finance ministry is looking into the possibility of a 15 percent special tax on online advertising revenue collected by foreign internet companies from German businesses.

It seems that the finance ministry is in the early stage of studying such a move.

Essentially, Germany is considering treating payments for online advertisements in the same way as licence fee payments. This would reportedly make German companies paying for advertising, subject to ‘withholding tax’.

These German companies that place online advertisements with platforms such as Google, would need to recover this withholding tax from the internet firms, as the revenue would be their original tax liability, the report said.

The German finance ministry had confirmed the plans, but stressed there was no agreement on how to proceed between federal finance authorities and individual states, the magazine reported.

European tax

Moves such as in Germany to tax digital giants could soon be unnecessary, as soon many European countries will require tech firms to pay more in taxes.

The European Union is reportedly close to reaching an agreement by March to implement a digital services tax.

The EU digital tax had been defeated in its previous form, due to opposition by Ireland, Scandinavian countries and Luxembourg. It needs unanimous approval by member states.

The European Union tax was only intended as an interim measure until a consensus was reached by the Organisation for Economic Co-operation and Development (OECD), across the world.

Frustrated at the delay, France implemented on 1 January 2019 a digital tax on tech giants such as Amazon, Google and Facebook after the European Union had failed to reach a compromise agreement before Christmas.

The UK has also proposed a national digital tax.

These moves come amid accusations that governments are failing to take action to rein in large tech companies, which are seen as paying minimal tax in Europe due to their use of accounting loopholes.

For their part, tech companies have previously defended their tax structures, and insist they abide by tax laws as they’re currently written.

Do you know all about IT and the law? Take our quiz.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

Recent Posts

Signal Shows Data Collection Adverts Facebook Rejected

Signal has had user-targetted adverts on Instagram blocked, as messaging service attempts to highlight Facebook…

5 hours ago

Oversight Board Upholds Trump’s Facebook Suspension

Bad news for Donald. Facebook's 'Supreme Court' upholds suspension of Donald Trump account, but asks…

6 hours ago

US Presses TSMC For More Chips For Car Makers

Global silicon shortage continues, as US Commerce Department presses Taiwanese chipmakers to ease the supply…

7 hours ago

Starlink Signs Up 500,000 Pre-Orders For Satellite Internet

Elon Musk space venture SpaceX has already signed 500,000 customers on pre-order for its Starlink…

9 hours ago

Apple Vs Epic Games Court Battle Continues

Second day of courtroom showdown in the US reveals Epic Games management would have accepted…

11 hours ago

Trump Launches ‘Communications’ Website

Banned from social media for instigating US Capitol riot, Trump launches 'straight from the desk'…

13 hours ago