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What Every Tech Company Should Know About Europe’s Digital Services Tax

The UK and the EU are eyeing big scores by drafting new tax laws aimed at tech companies, but Washington, and some Euro businesses are crying foul.

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The Tax Plan Cometh

In a pincer move against Silicon Valley, the UK and the EU are pushing forward new taxes aimed at the cash-generating tech industry, with the EU targeting specific operations such as taxes on the sale of user data, and taxes on ad hosting platforms, while the UK has launched a more broad assault against global revenue.

The two separate plans call for sharp increases in the amount of levies paid by technology heavyweights with projections by the EU of raising $5 billion annually, and the UK looking to reap a half-billion dollars each year from tech giants.

The plans have prompted pushback in the U.S. from the administration, and an industry-leading trade group. In EU, four of the voting countries, and some of the companies themselves have banded together to fight the proposal.

The European Commission’s Digital Service Tax proposal targets tech companies that do business inside members states, but don’t have a physical presence there. The EU said the tax is meant to “level the playing field” for brick-and-mortar companies. In addition to new taxes on the business of technology, the EU is also proposing an “interim” tax to go into effect immediately that would “claw back” revenue from tech companies.

With Brexit looming, the UK has its own version of the digital service tax, which was announced Monday and is poised to go into effect in 2020.

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