EU tech-tax causes problems

EU building

writer icon Joachim Avoja     Moritz D.   |   Culture     🕐 01. May. 2018

There is a proposal for extra taxes for tech companies on the EU’s table. If legislated, it would force 160 global tech companies to pay a 3% tax on sales within the EU. This is in addition to the usual corporate tax. Sweden is one of the countries against this proposal.

“The government is opposed to using a sales-based excise duty.”
, is Sweden’s opening statement prior to the negotiations with the other EU countries.

All 28 countries within the EU must agree for the proposal to go through. The website Di Digital has now been able to confirm that Sweden is going to oppose this proposal.

“We have not been convinced of the Commission's argument as to why such a tax should be introduced. There has been no convincing evidence that the digital economy should be treated differently"
, says Leif Jakobsson, State Secretary for Tax Affairs, to Di Digital.

A decision was made on Tuesday 24th April, when Minister of Finance Magdalena Andersson met with the Swedish Parliament’s tax committee. To represent an opinion in EU-negotiations, the government needs the approval of Parliament.

At the EU-meeting in Brussels in February, Prime Minister Stefan Löfven was still open to saying yes to the proposed extra taxes. He explained how the taxes were the “starting point” to solve the issue of fair taxation for digital companies in Europe.

“We want to do something about it. There is a problem. Handling it requires a little balance. It can hit back if you're wrong.”
said Löfven. Spotify opposes the extra taxes One of the companies that are against the extra taxes is music-streaming service Spotify. Daniel Ek, CEO of Spotify, made his feelings clear in a letter addressed to Löfven on the 26th of March. Subsequently, on the 29th of March, Veckans Affärer published the letter on their website in its entirety.

“Such a tax would be very harmful to European start-ups and fast-growing companies, such as Spotify. We at Spotify do not think it would be fair to tax some digital companies differently than other companies.” 
wrote Ek in his letter to the Prime Minister.

Ek claims that the taxes could delay companies from being independent and in some cases make it impossible altogether.

He has a suggestion for a solution, that not surprisingly would benefit Spotify.
“I think that a fair proposal should be that tax on sales only occurs if the company is actually profitable. Companies that make losses should not pay taxes on profits that they actually do not have.”
he continues in his letter.

Ek ends his letter by stating that he would be open to meet Löfven to discuss the matter of the taxes. He states that he wants to find a fair and balanced solution that helps Europe to go forward.

Sweden’s viewpoint on the taxes
Despite Löfven being open to the taxes in the EU-meeting in Brussels, Sweden is still opposed. This is made clear by Mathias Sundin, Tax Spokesman for the Liberals.

“The Swedish position is now clearly negative to this proposal, which has been our opinion all the time. You must realise that an EU negotiation awaits, where we have most major countries against us. But the important thing is that Sweden has now formulated a clear opinion.”
says Sundin to Di Digital.

As he points out, by opposing the proposed tax, Sweden is in the minority. The only other countries against the extra taxes are Denmark, Luxembourg, Ireland and Malta.
“I know that the Commission and Margrethe Vestager is doing a hell of a job trying to tax Google and other companies that are situated in Europe, but we should be very careful not to tax the products because it is … our citizens [who] will use the products,”
said Kristian Jensen, Finance Minister of Denmark, during a press conference in Tallinn, Estonia, on 16th September 2017.

The Swedish government wants a long-term solution within the global Organisation for Economic Co-operation and Development (OECD). Such a solution is expected to be in place by the year 2020. The government expects that the EU-commission is going to want to commence with the negotiations as soon as possible.

Leif Jakobsson said to Di Digital, “Although we have a very sceptical and negative attitude, we will actively participate in the work. Not least, we will problematise the many technical problems in this proposal. It is not certain that all countries will ultimately think this is great”.

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