Just ahead of its next multi-year budget proposal, the European Commission is walking back plans to impose a digital tax on Big Tech companies, handing a win to both U.S. tech giants like Apple and Meta, and to President Trump.
Out with the digital tax, in with a few more
Initially pitched as a way to help repay the EU’s shared pandemic-era debt, the digital levy was floated in May and appeared in internal drafts of the bloc’s next seven-year budget, now expected to be published by the European Commission this Wednesday, July 16.
However, as European Union and U.S. negotiators enter the final stages of talks over a broader trade agreement, the Commission has pulled the tax from its list of proposed revenue sources.
The document, obtained by POLITICO and circulated late last week, outlines new options for raising EU revenue starting in 2028, including levies on tobacco products, discarded electronic equipment, and large companies with over €50 million in EU turnover. However, the previously floated digital tax is missing.
And while (barring any exemptions), tech companies would probably still be subject to the proposed €50 million turnover fee, they wouldn’t be singled out as they were under the earlier digital tax plan.
It’s also worth noting that the document POLITICO reported on reflected the most recent draft at the time, and the final version could still change before publication.
What Brussels is proposing instead of the digital tax
Instead of taxing digital services, the Commission is expected to float three alternative levies:
- A new EU-wide tax on tobacco products (currently taxed only at the national level),
- A levy on discarded electronic equipment,
- And a corporate tax targeting companies with over €50 million in annual EU revenue.
The goal is to generate €25-€30 billion/year to help repay the bloc’s joint debt. However, implementation would depend on how much political friction these proposals generate among member states, and there seems to be quite a few wrinkles to iron out.
Italy, Greece, and Romania, for instance, have already voiced concerns over new taxes on e-cigarettes and vapes. Sweden, for its part, called the idea of sharing national tax revenue with the EU “completely unacceptable.”
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