The German government plans to introduce a 10% targeted tax
in digital giants.
Friedrich Merz's fresh government was in pain. erstwhile he was yet called up, it turned out that he was almost entirely consumed by political battles with the fresh Donald Trump administration.
This situation is highly different from the 1 that occurred in 2021 erstwhile Olaf Scholz became head of the German government. The president of the United States – Joe Biden was at the time sympathetic to the German plans for the federalization of Europe, and the governing coalition agreement leaders had very ambitious assumptions. It was then, for the first time, that the independency of associate States was openly called upon.
Merz’s hard Beginnings
Of course, the Merza government has not given up on these plans, but it will shortly have considerable problems with their implementation, even due to the consequence of the presidential elections in Poland. The main concern for the German ruling camp is the ongoing trade war with the US, which in Germany caused a real panic. After a fewer weeks of passive expectation, the Merza government yet managed to counterattack in the form of a proposal to introduce a digital tax.
In the light of the disclosed plans of 10% tax, large digital platforms, including primarily Meta or Google, would be placed. As in almost all countries of the world, they derive crucial financial benefits from their activities in Germany, paying comparatively small taxes. In our country, there is no deficiency of opinion that digital giants prey only on the taxation systems of weak and smaller countries. However, specified practices are besides common in Germany, which are definitely not weak. Over the years, the German state has turned a blind eye to the full phenomenon, not wanting to worsen transatlantic relations. Since Donald Trump moved into the White House, old sentiments have clearly lost their meaning.
The intention of introducing a digital taxation was informed by German cultural minister Wolfram Weimer, who argued that the fresh solution would let for fairer taxation and would force the usage of German infrastructure giants to make a greater contribution to supplying the gross to the state budget.
The German task is modelled on a legal solution that already exists in Austria (where there is simply a 5% online advertising fee). However, Minister Weimer pointed out that the solutions presented by his ministry were simply a preliminary proposal, subject to further negotiations. It has even been suggested that any operators may be exempted from the fresh rules if they themselves commit themselves to voluntary donations beforehand. Thus, it may be possible that the German digital taxation will take the form of individual arrangements, as if a uniform and commonly applicable rate on gross were introduced, the digital giants would gotta anticipate real large sums to be paid.
Against EU plans
An highly interesting point in the full case is that Germany crosses the European Commission's plans with its proposal. As early as 2018, Brussels planned a single digital taxation for the full community of 3% for companies with revenues higher than EUR 750 million per year. The gross from this taxation was to be allocated, inter alia, to the repayment of the common debt which appeared with the NextGenerationEU plan.
Little, for a time, at least before Trump's victory, plans to set a uniform digital taxation rate for all OECD countries were very advanced. However, Trump withdrew the United States from all global global taxation agreements, which besides influenced EU initiatives. The impatient Germany seemingly lost hope of always coordinating the full task even at the EU level (where Ireland resisted heavily), so they decided to take matters into their own hands.
Germany is an undisputed economical and political hegemon on the Old Continent, but their strength is mainly due to Europe's weakness. In a global context, however, their position is systematically eroded, which in peculiar gives emergence to fresh technologies. The largest company from Rhine in this area is providing software for SAP companies. In terms of capitalisation or the number of employees, the company is immense in comparison with even the biggest Polish IT companies, but at the same time it presents itself as at least respective times smaller than Apple, Meta or Amazon.
It is not entirely a coincidence that Europe has been so eager to receive a digital taxation recently: they have implemented or are planning to implement their own versions, including France, large Britain, Italy or Spain. It is besides very meaningful that its introduction is not proposed in the United States, which are under force only from Chinese competitors.
Arguments in the negotiations
The plans to introduce the German digital taxation were announced just before Chancellor Friedrich Merz visited Washington. Based on Trump itself, the head of the German government will most likely want to usage a 10% digital taxation as its starting point in ongoing trade negotiations. This alone shows the gross disparity of the real force that both countries have. Trump unilaterally increased the duties to the full world, and Germany, so far, has only responded to a fresh taxation proposal.
Surely the Merza government, however, struck a delicate point. Trump, who has been trying from the beginning to have large Tech leaders on his side, cannot let specified an crucial manufacture to be harmed. The German government, on the another hand, is determined to fight to the bottom, as the current trade war will, according to all likelihood, end badly for it. Representatives of the largest German companies are already negotiating in Washington, D.C. today, mainly to minimise losses. As shown by the example of the US-UK trade agreement concluded initially, all country in the planet will yet gotta take on losses and accept claims of the American state.
As of 9 May, there is simply a 90-day pause in additional duties for the European Union. However, on the horizon there is simply a imagination of the introduction of rates reaching for steel or aluminium even 50%. Today, no 1 in Europe even allows specified a script to take place, but given how inflexible German political leaders are, nothing can be completely excluded.
Even before Donald Trump was elected President, I suggested in these pages that he might become the main reformer of the European Union. This forecast seems to be fulfilled each week. There is no uncertainty that the now threatening US digital taxation Germany will yet gotta accept defeat and will be forced to make crucial changes in its economy as part of the economical rescue. It would be much better for the German state itself if, alternatively of fighting the technology sector with peculiar taxation, it created a favourable environment for the technology manufacture to make in Europe. However, with the current political power, there is nothing to number on.
