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Visegrad Group pledges support for European tax on digital economy

Meeting on the sidelines of the 2018 Tatra Summit held in Slovakia, the Finance Ministers of the Visegrad Group (Czech Republic, Hungary, Slovakia, Poland) pledged to support an EU plan to tax the digital economy by the end of the year.

While a European tax on the digital economy has been a recurring issue and negotiations have long stalled, French President Emmanuel Macron has made it one of its core priorities. The Meseberg declaration, adopted last June with German chancellor Angela Merkel, singled it out as one of the most pressing issues and underlined the need to find an agreement by the end of the year.

In order to accelerate the process, France’s Finance Minister Bruno Le Maire made the trip to Slovakia’s mountainous region to convince his counterparts from Germany and the V4 countries of the need to tax digital giants. The trip seems to have been successful: while Germany’s Finance Minister Olaf Scholz reiterated his desire to find a solution by December, Finance Ministers of the Visegrad Group signed a joint declaration also pledging their support to the project.

According to the document – co-signed by Alena Schillerova for the Czech Republic, Peter Kazimir for Slovakia, Mihaly Varga for Hungary and Piotr Nowak for Poland – the Central European countries “recognize that digitalization is regarded as one of the most significant development of the economy since the industrial revolution; however, the taxation of the digital economy has not fully reflected the advantage created by the spread of technology”. “We support without prejudice to the final text of the directive, the adoption of the Digital Service Tax as soon as possible”, it concludes.

On Twitter, Slovakia’s Finance Minister Peter Kazimir declared that this joint declaration underscored “the need for long-term and interim European solution on fair taxation of digital economy”.

Although most EU governments agree that current tax rules should be changed to increase levies on companies offering digital services, the scope and precise nature of the tax remains a controversial issue. While large states, like France and Italy, complain about losing billions of tax revenues to digital giants’ fiscal optimization schemes and are pushing for a comprehensive directive, lower-tax countries like Luxembourg, the Netherlands and Ireland appear as the most vocal opponents to such a project.

According to EU treaties, the adoption of fiscal measures requires the unanimous approval of all member states.

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