Austria Digital Advertising Tax Could Face State Aid Woes

Austria’s 5% tax on digital advertising revenue of companies like Alphabet Inc.'s Google and Facebook Inc., is likely to fall foul of EU competition rules, because part of the proceeds collected will be used to fund domestic businesses.

The levy will be applied to any company with 750 million euros ($826 million) in worldwide revenue and 25 million euros of digital advertising revenue in Austria, with effect from from Jan. 1, 2020.

But it could face challenges from the EU over its design, according to Leopoldo Parada, a professor of international tax law at the University of Turin, ...