French and German authorities are continuing to seek ways to rein in tech companies. The latest efforts from the EU5 nations will see a 3 percent tax imposed on digital advertising. It seems clear that such legislation would be a direct move to limit Google and Facebook.
Both Google and Facebook make most of their revenue through advertising, usually through directly targeting users. Of course, other companies also use digital marketing, but those two giants would be particularly affected by a digital advertising tax.
“We reaffirm our determination to establish a fair and effective taxation of large digital companies that will contribute to the modernization of our tax systems,” the declaration says.
France and Germany have been seeking to clamp down on tax avoidance amongst tech companies. In August, the two largest economies in Europe working independently sought new tax laws.
“Europe must learn to defend its economic interest much more firmly — China does it, the U.S. does it,” French Finance Minister Bruno Le Maire said at the time. “You cannot take the benefit of doing business in France or in Europe without paying the taxes that other companies — French or European companies — are paying.”
Both nations have been frustrated by repeated efforts from tech companies to take advantage of tax loopholes. While those loopholes have not been shored up through new laws, France and Germany think adding extra tax is the answer.
Their proposal will be presented to EU finance lawmakers this week and would be passed in 2019 with a launch in 2021.