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Europe's taxes on tech are not anti-US, top EU official says

Key Points
  • Last week, Paris introduced a 3 percent duty on French revenues of roughly 30 major companies, mostly from the U.S.
  • This policy sparked criticism in the U.S., where officials argued the tax is an attack on its own companies.
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No consensus among EU leaders on digital tax

The United States shouldn't try to intimidate European countries over their efforts to tax top tech companies, the EU's commissioner for taxation told CNBC.

Taxing digital companies, such as Facebook and Alphabet's Google, has become a priority for certain European governments, including France. Last week, Paris introduced a 3 percent duty on French revenues of roughly 30 major companies, mostly from the U.S. This policy sparked criticism in the U.S., where officials argued the tax is an attack on its own companies.

"We are not disputing the capacity of the U.S. to decide on their own tax issues and they must also respect our own national and European sovereignty," Pierre Moscovici, who's in charge of taxation matters at the European Commission, told CNBC in an interview Tuesday.

"This is why, frankly, I don't think this is a respectful attitude, to attack a country because it would create a digital tax. These digital taxes, and our proposal, are not anti-U.S.," the former French finance minister said.

According to data from the Commission, digital companies pay on average an effective tax rate of 9.5 percent in the EU — compared to 23.2 percent for traditional businesses.

Chip Harter, the U.S. Treasury's top international tax official, said Tuesday that digital levies are "ill conceived."

"What we have seen of the most recent French proposals, we view them as highly discriminatory against U.S. businesses...Various parts of our government are studying whether that discriminatory impact would give us rights under trade agreements, WTO, treaties," he said.

"The United States opposes any digital services tax proposals whether they be French or U.K.," Harter added, according to Reuters.

Aside from France, the U.K., Spain and Italy are also looking at imposing higher taxes on digital firms.

Speaking to CNBC, Moscovici also said: "The United States are our allies, they are our friends and between friends you don't try to intimidate, you don't attack each other."

EU-wide digital tax abandoned

The Commission — the executive arm of the EU — unveiled plans a year ago to tax companies where they actually generate business, rather than where they are headquartered.

The proposal could change how digital businesses are taxed. It said firms with significant online revenues should pay a 3 percent duty, but that would only apply to certain online revenue streams like the sale of user data or online advertising.

However, despite months of ongoing discussions, talks broke down on Tuesday after the 28 EU members states didn't reach a consensus over the tax. Ireland, Sweden and the Netherlands were among those opposing a European levy on digital firms.

Moscovici said that he was "disappointed" with the lack of consensus. However, he noted that it is a new issue facing governments. "There is no digital taxation anywhere in the world. We are the first ones to propose that," he said.

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