At a summit in Tallinn on Friday 29 September, EU heads of state recognised the importance of encouraging digital innovation, but were divided over the issue of taxing web giants. The Estonian Presidency of the Council of the EU is expected to convene a special Telecoms Council to accelerate the talks.
The Estonian Presidency convened a meeting of the heads of state over two days – an informal dinner on Thursday 28 September (see separate article) and a summit on Friday on digital issues. The second day is due to discuss confidence, security, online administration, industry, society and the economy in a digital environment. We understand that the question of online administration was not discussed at length, but the issue of taxing web giants (GAFA) spread over the two days.
Taxing GAFAs
A letter co-signed by France, Germany, Italy and Spain is hard-hitting. Calling for a digital strategy in Europe, the four countries reiterate their call on the European Commission for it to examine the idea of an equalisation tax on turnover. This idea was already backed by ten member states (the above four plus Austria, Bulgaria, Greece, Portugal, Romania and Slovenia) ahead of the ECOFIN Council on 16 September (see EUROPE 11859).
At a press conference, the Elysée said it had received the support of 19 member states (but didn’t confirm which ones). Arriving at the summit, the Irish prime minister, Leo Varadkar, clearly expressed opposition to the idea, saying that more taxes would not encourage the development of a European Google or Facebook. He added that the question had come up over dinner on Thursday.
At a press conference on Friday, the prime minister of Luxembourg, Xavier Bettel, said the question had been raised by Austria. Bettel said that tax issues had to done at the OCDE and there needs to be agreement about a common strategy. We understand that the idea of a turnover tax is opposed by Hungary, Denmark, the Czech Republic, the United Kingdom, Ireland, Luxembourg, Sweden and Cyprus. The Netherlands seems to be sitting on the fence at the moment.
Special Telecoms Council
Europe’s leaders also addressed short- and medium-term issues when it comes to encouraging digital innovation and being better prepared for cyberattacks.
Asked to attend the morning meeting on the future of e-administration and cybersecurity, Prof. Jarno Limnell (Aalto University in Finland) said that there was some awareness among the EU28 of the need to act together to tackle cyber threats. He based his speech on the treat of a shortage of cybersecurity professionals and called for transparent algorithms for tackling cyber-psychological threats that impact on Europe’s values.
The British prime minister, Theresa May, said they had to step up cooperation and the United Kingdom pledged to work with its partners to use its leadership and expertise to boost cybersecurity in Europe. Xavier Bettel said he had called for NATO’s budget to be used to deal with cyberattacks, but had received little backing for the idea.
More attention was paid to the Luxembourg premier’s idea of a special meeting of the Telecoms Council earlier than the meeting officially scheduled for 4 December. During the debate, he was given the backing of the French president, Emmanuel Macron, and a European source said the Estonian Presidency of the Council of the EU had been ‘highly receptive’ to the idea. The meeting could take place at the end of October or early in November.
Noting that the EU28 was now aware of digital issues as an element of profound transformation of European societies and economies, Macron talked of ‘four pillar’ of action – pursuing a reform policy (labour market, taxation) and transformation to encourage the emergence of European digital champions; ensuring an integrated Single Market to scrap the system of twenty-eight different rules and encouraging new channels for financing players; encouraging fair competition since some Anglo-Saxon players are not respecting the rules of the game; reducing the digital divide that affects whole populations and areas, which could be done using a tax on GAFA turnover; and making progress on cybersecurity.
Speaking about introduction of the strategy for a single digital market, the president of the European Commission, Jean-Claude Juncker, said that only six of the twenty-four areas of draft legislation proposed since he came to office had been seen through. He particularly regretted the lack of progress on connectivity, saying that at the June summit last year, they had agreed on greater coordination on managing the frequency spectrum but had got nowhere in twelve months. He said there wasn’t agreement at the Council because some ministers were vetoing it.
A special conclusion document will be drawn up for approval by the European Summit in October. (Original version in French by Sophie Petitjean)