Will a new digital tax be implemented on large corporations?

It is common knowledge that large corporations like Apple and Google , among many others, achieve substantial reductions in corporate tax payments by shifting their profits to low-tax EU countries such as Ireland, the Netherlands, Malta, etc. For this reason, Europe is considering implementing a digital or technology tax to eliminate this "minor problem."

What is the technology tax?

The technology tax would be the mechanism to equalize the tax differences that exist between the different EU countries, ending this debate. Some of the largest tax differences between EU countries can be seen below:

(Comparative table of corporate income tax rates)

This tax would therefore compensate, where the services are actually produced or the value is generated, for the revenue shortfall caused by the aforementioned relocation mechanisms.

What has prevented Europe from implementing this technology tax until now?

It should be noted that several obstacles have prevented this reform from being presented earlier. The most obvious are, on the one hand, the differences between the fiscal policies of each EU country and, on the other, the involvement of the United States in this matter.

What role does the United States play in this?

The United States plays a key role in all of this, since a large part of the companies involved are American technology companies, so, given the online nature of the services, a very important part of their income ends up being taxed in the United States and consequently a possible tax reform could negatively affect the income of the American treasury.

In conclusion

As we can see, this is still an unsolved problem and only one possible reform to implement this technology tax has been proposed.

We can conclude by stating that this whole matter should be addressed in more depth, once all parties have made their statements and we see what the actual tax reforms will be in this regard.

Once events unfold, we will be able to analyze their potential effects, both negative and positive, on the Spanish and European economies.

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Francisco Romero

Tax and accounting consultant at Àmbit Assessor

With a degree in Business Administration and Finance, he combined his work as a consultant in the tax and accounting department of Gestart Assessores with his studies for ten years, primarily a degree in Business Administration and Management from the University of Barcelona. In March 2017, he joined Àmbit Assessor, SL as a tax and accounting consultant.

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