France and Germany plan tax crackdown on U.S. tech giants

“France is working with Germany and other partners to plug loopholes that have allowed U.S. tech giants like Alphabet Inc.’s Google, Apple Inc., Facebook Inc. and Amazon.com Inc. to minimize taxes and grab market share in Europe at the expense of the continent’s own companies,” Francois De Beaupuy, Caroline Connan, and Geraldine Amiel report for Bloomberg.

“France will propose the ‘simpler rules’ for a ‘real taxation’ of tech firms at a meeting of European Union officials due mid-September in Tallinn, Estonia, French Finance Minister Bruno Le Maire said in an interview in his Paris office on Friday, complaining that Europe-wide initiatives are proving too slow,” De Beaupuy, Connan, and Amiel report. “The push reflects mounting frustration among some governments, regulators and, indeed, voters, at the way international firms sidestep taxes by shifting profits and costs to wherever they are taxed most advantageously — exploiting loopholes or special deals granted by friendly states.”

“Germany and France discussed tax issues at a joint cabinet meeting last month and Germany can be expected to discuss specific proposals after its national election on Sept. 24, Denis Kolberg, a finance ministry spokesman, told reporters in Berlin on Monday,” De Beaupuy, Connan, and Amiel report. “[French] President Emmanuel Macron… is renewing a broader call for the 19 euro-area states to better align their tax systems. Le Maire said that Macron’s pledge to lower corporate taxes to 25 percent by the end of his five-year term should be seen as an opening gambit in this process. He urged countries with lower tax rates to raise them.”

Read more in the full article here.

MacDailyNews Take: It’ll be interesting to see where these proposals — especially the idea of tax harmonization across the 19 euro zone members — lead, if anywhere.

SEE ALSO:
Ireland seeks custodian for Apple $15.2 billion in back taxes as collection nears – July 22, 2017
EU Commissioner Vestager: Ireland ‘taking too long’ to recover Apple tax – May 19, 2017
EU’s hypocritical Margrethe Vestager going after Apple while backing Madeira tax avoidance scheme – February 14, 2017
Apple has missed the deadline to pay $13.9 billion to Ireland in illegal tax benefits – January 31, 2017
Apple CFO Maestri: What the EC is doing here is a disgrace for European citizens, it should be ashamed’ – December 19, 2016
Apple’s EU tax nemesis Margrethe Vestager takes aim at other U.S. companies’ offshore profits – September 19, 2016
The ‘Brexit-Apple’ connection: What in the world was Margrethe Vestager thinking? – September 12, 2016
EU ministers line up to take tax bites out of Apple – September 12, 2016
Former EU competition commissioner: Vestager claim that Apple owes back taxes an incorrect use of EU law – September 2, 2016
Irish government to fight EU on Apple tax – September 2, 2016
Treasury accuses EU of trying to steal U.S. tax revenues with Apple decision – September 1, 2016
Irish residents opposed to EU’s tax demand of Apple – September 1, 2016
Apple Inc. pushes back against EU tax grab – September 1, 2016
Apple may repatriate billions of dollars next year after new U.S. President takes office – September 1, 2016
U.S. tax code allows for dramatic retaliation against EU overreach in Apple case – September 1, 2016
Apple CEO Tim Cook on EU tax demand: ‘No one did anything wrong here and Ireland is being picked on… It is total political crap’ – September 1, 2016
U.S. Treasury: The European Commission’s retroactive tax demands on Apple are unfair – August 30, 2016
EU demands Apple pay massive $14.5 billion in taxes plus interest – August 30, 2016
U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else – August 25, 2016

30 Comments

  1. Tax harmonization across Europe would be unfortunate as it would remove any incentive for local governments to be competitive in providing attractive environments for business. I thought the idea of the EU was to promote competition. But whatever.

    I do hope that the national governments will be permitted to vote of this rather that it be imposed by unelected EU bureaucrats.

    And most of all, this better not be retroactive!

  2. Sales should be taxed where they occur and the profit is made. If you sell in the US then the sale should be taxed there. If you sell in Japan then it should be taxed there. Etc etc.

    Anything else just leads to companies avoiding tax.

    1. The problem arises because with a company operating in Europe, it’s the profits that are taxed, not just the sales and these loopholes concern corporation taxes. Sales taxes are hard to avoid and so are taxes for workers, but taxing profits can get you into some very uncertain waters.

      It’s possible to use creative accounting techniques and offset bogus expenses against profits. A typical ploy is to claim that a European subsidiary of an international company has to pay massive royalties to the parent company ( sometimes around 20% ) for rights to intellectual property or branding and those expenses are tax deductible. If they play the game cleverly, a company can reduce their tax liability in a given country to near zero and there are a lot of massive international companies who have devised sophisticated strategies or exploited obscure loopholes so that they have paid virtually no tax at all for decades, despite having had immense incomes during that time.

      The public should be very concerned about these sorts of practices because if a large company manages to wriggle out of paying a hundred million dollars in taxes, then the government either needs to collect and extra hundred dollars from a million honest workers, or will need to cut a hundred million dollars of expenditure in order to balance it’s books.

      Every part of the world has a different mix of taxation methods. Europe has fairly high corporation tax and modest levels of personal income tax, and the precise mix varies from country to country within Europe. The proportions of personal and corporation tax are quite different in America or Australia. If companies cheat the system, the system has to be changed to make them pay a fair share. Harmonising taxes throughout Europe is one step towards stopping multinational companies exploiting differences between tax rules in different countries and gaining a competitive advantage over local companies who pay their taxes honestly.

  3. France is working with Germany and other partners to plug loopholes that have allowed U.S. tech giants like Alphabet Inc.’s Google, Apple Inc., Facebook Inc. and Amazon.com Inc. to minimize taxes and grab market share in Europe at the expense of the continent’s own companies,”

    I’m sorry, but the tax loopholes had nothing to do with the “grab market share.”

    1. “… at the expense of the continent’s own companies,”

      I wonder what European companies they are referring to, as I’ve never heard of any that can compete with U.S. companies in those categories.

    2. If an international company avoids paying taxes in a given country, while locally based companies pay their full shares of taxes, then those local companies are paying a business expense which the large companies are not and are therefore trading at a disadvantage as the larger company can take advantage of better margins to grab market share.

      There is no intent to disadvantage foreign companies, they want to make them play on a level playing field and not abuse an unfair advantage which is unavailable to others.

      1. no, as evil as the Federal Reserve is, it cannot make law forcing their unelected will on this country vis a vis immigration, security, censorship, etc.

  4. “The clampdown on tech firms is part of President Emmanuel Macron’s muscular approach to ensuring a level playing field”

    Statements like that and peace sure are a threat to Apple’s home nation.

  5. 20% plus VAT added to each iPhone sale is not enough for the bloodsuckers. If Apple pulled the iPhones tomorrow I don’t think there would be a massive downgrade to Android phones. Corporate income tax is just gravy on this.

    1. excellent…when our president gets the corporate tax to 15% in the United States, Mercedes Benz, Porsche, Citroen will be moving here.

      game. set. match.
      America wins.

    1. Tit for tat taxes would likely bring on a mighty deep recession. Regardless of what the Euros do, it would not benefit American citizens for the US Government to retaliate. The loss is theirs.

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