French finance minister to seek Irish support for digital tax

The French finance minister, Bruno Le Maire, will seek support from his Irish counterpart Paschal Donohoe and Taoiseach Leo Varadkar for a European proposal on digital taxation when he meets them in Dublin on Tuesday.

Mr Le Maire will also deliver a talk on economic policy at the International Institute for European Affairs.

The European Commission proposed in March 2018 that digital giants be taxed on three sources of income: exploitation of data, advertising revenue and sales on digital platforms. France supported the proposition enthusiastically while Ireland opposed it.

After long negotiations, Germany agreed in December to accept the proposal, but for advertising revenue alone.

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There are now four holdouts in the European Union, according to the French finance ministry: Denmark, Finland, Sweden and Ireland. Mr Le Maire seeks to convince them that "the world is changing and Europe must change with it", a source said.

Fiscal justice

Mr Le Maire will next week announce a move to adopt a national digital tax that will include all three areas originally proposed by the commission. And France will make fiscal justice a priority of its upcoming presidency of the G7 group of the world's most powerful nations.

The streamlined EU proposal is ready, the finance ministry source said. “Now it is purely a political decision. If some states really want to block it, obviously they can, since it requires unanimity. But they must assume their responsibilities because this is something that many citizens are demanding. One of the first things that the gilets jaunes [yellow-vest protesters] demanded was taxation on multinationals.”

France "understands that it is difficult for Ireland," the source continued. But Ireland "has a lot of positives to offer businesses, besides low taxation. If it was only about tax, companies would go to Hungary, which has a lower rate."

The French official mentioned Ireland’s “positive business environment, the English language and a flexible, well-educated labour force”. Ireland has no reason to fear digital taxation, the source concluded.

France and Ireland “agree on a great deal regarding trade, Brexit and the deepening of the euro zone,” the source emphasised. “We work very, very well together. You cannot reduce our relationship to one issue.”

Mr Le Maire will also discuss the desire of some EU countries, including France, to shift decision-taking on fiscal issues from unanimity to qualified majority voting. These are early days, the source admitted. “There are quite a few states who are not ready.”