Germany Mulls Digital Tax on Google, Meta, and Others
Proposed Action in Bundle: Major Companies Like Google Should Implement a Digital Tax - Proposed Actions in Germany: Digital Companies, Led by Google, to Implement Tax on Digital Services
Germany's Culture and Media State Minister, Wolfram Weimer, is spearheading plans to implement a digital tax aimed at major internet companies, such as Google and Meta. Weimer disclosed these intentions in an interview with "Der Spiegel," announcing that a draft law is currently under preparation.
Possible Tax Approaches
Weimer considers two potential avenues for this new tax. First, he proposes taxing online advertising services. Second, a voluntary commitment is being deliberated as an alternative approach. Weimer asserted that a moderate and legitimate tax rate of 10% would be suitable, focusing on platform operators with multibillion-dollar revenues, rather than solely on Google Ads.
Austrian Model as a Reference
The model for this digital tax could draw inspiration from Austria, which implemented a 5% levy on large online platforms' advertising revenue as of 2020. Termed a "platform solidarity tax," this measure would reportedly extend to platforms utilizing media content, encompassing both journalistic and cultural products, according to Weimer. However, he did not provide further details regarding the potential revenue generated or planned usage of the funds.
Response from Press Publishers
In response, spokespeople for the Alliance for the Future of the Press from the Federal Association of Digital Publishers and Newspaper Publishers (BDZV) and the Association of Free Press Media (MVFP), Matthias Ditzen-Blanke and Philipp Welte, commended the government's intention to hold platform monopolies accountable in the interest of digital media diversity. They stressed the importance of directing the revenue towards offsetting the financial burden faced by editorial media undermined by these platforms.
Potential Impact on End-Users
Weimer assured that end customers would not be asked to shoulder the tax burden. Preliminary findings from Austria suggest that such a tax would not significantly affect consumers, while simultaneously encouraging tech companies to make a modest contribution to society and foster competition.
Coalition and Platform Discussions
These plans align with a mandate in the coalition agreement between the Union and the SPD, which calls for examining the introduction of a tax for online platforms that leverage media content. The proceeds from this tax would likely benefit the media sector. Discussions with platform operators, such as Google, are planned at the highest level to explore alternative solutions.
Weimer expressed optimism about potential unity between the Union, SPD, and Greens on the issue. He asserted that, given Germany's increased dependence on American technological infrastructure, it was time for action against tech giants like Google and Meta, who skilled in avoiding taxes.
[1] According to the Enrichment Data, the government's motivation for this digital tax stems from concerns about tax evasion by large tech companies while profiting disproportionately from Germany’s media, cultural output, and infrastructure.
[2] The Austrian model will serve as a model for the German digital tax, imposing a levy on the digital services provided by large tech platforms, primarily to ensure tax fairness and close gaps in traditional tax rules.
[3] If implemented, large digital platforms, such as Google and Meta, would face an additional 10% levy, which could potentially lead to increases in costs for end customers if these companies pass them on. Officials emphasize the significance of international coordination to avoid trade disputes or unilateral retaliation from affected nations, particularly the U.S.
- Given the concerns about tax evasion by large tech companies profiting disproportionately from Germany's media, cultural output, and infrastructure, EC countries might consider implementing a digital tax similar to the Austrian model, which imposes a levy on digital services provided by large tech platforms to ensure tax fairness and close gaps in traditional tax rules.
- To foster competition and encourage tech companies to make a modest contribution to society, EC countries, such as Germany, could implement a digital tax on major internet companies like Google and Meta, following the Austrian model that levies a 10% tax on large digital platforms, primarily to create a more equitable tax environment for traditional media and cultural sectors.
