EU Proposes Corporate Tax, Ditches Bloc-Wide DST in New Budget

The EU didn’t include a bloc-wide digital services tax on tech giants like Amazon, Google, and Meta in its latest proposal to marshal revenue, according to a European Commission document seen Friday by Bloomberg.

Instead, the European Commission is proposing a new tax on corporations, an excise tax on tobacco, and a tax on electronic waste. The new corporate tax seeks to ensure that companies are contributing to the bloc’s budget.

The US, particularly the Trump administration, has long slammed digital services taxes as “discriminatory,” arguing that they apply mostly to American tech companies.

Canada revoked its DST in order to bring the Trump administration back to the trade negotiating table. The move from the US’s northern neighbor has prompted speculation about whether European countries would follow suit.

Countries in the EU, including France, Italy, and Spain, were some of the first nations to impose DSTs—small levies places on money made from online activities such as digital ad sales—during the first Trump administration. A DST has been discussed as an EU-wide measure, but it didn’t win support.

Under the draft proposal, European companies and foreign-owned companies with a permanent establishment in the bloc and annual turnover of 50 million euros ($58.4 million), would be expected to pay a “lump-sum” annual contribution.

The commission is scheduled to propose its budget July 16.

Revenue from the EU carbon market remains the “backbone” of the commission’s proposal for the next budget. Still, most revenue from the sales of emission allowances in the existing cap-and-trade program will remain in the hands of national governments.

The new carbon market for transport and heating fuels, known as Emissions Trading System 2, won’t be considered a source of financing for the EU budget at all.

The levies are part of a plan for the EU to raise its “own resources,” meaning money that is outside of the regular funding each country pays.

According to the document, “the European Union faces growing demands in key areas such as the green and digital transition, defence, migration, and resilience to external shocks.”

—With assistance from Jorge Valero at Bloomberg News.