It looks another fight is breaking out about taxes, and this time it is in Europe.
Amazon, eBay, and other multinational companies often set up EU subsidiaries in low tax countries like Ireland and Luxembourg. But because of EU laws, they can operate services or marketplaces in countries that have higher corporate taxes, such as France and Germany.
France is leading the push, presumably after a court in France recently ruled that Google was not liable for to pay 1.1. Billion Euros as the company had no “permanent establishment” in France. In fact, Google (Alphabet, Inc.) runs its European operation out of Ireland.
The four finance ministers of France, Germany, Italy, and Spain want to present the issue to other EU counterparts in a scheduled meeting on September 15-16 in Tallinn.
The four are requesting a taxation scheme based on where the multinationals create value or profits, not the location of their tax residence.
Since no specific details are made yet by the EU, it is believed to be similar to a previous proposal by France that wants to use a percentage based system.
In that system, the companies would have to report the percentage of gross revenues generated and then pay taxes on that percentage of the profit realized in the EU.
WHAT DOES THIS MEAN TO MARKETPLACE SELLERS?
Right now it means nothing. This proposal is just another attempt by governments to deal with the problem that some countries or tax locals offer lower rates than others.
In some ways this is similar to the U.S. issue of sales tax not being collected by online retailers that have no nexus or tax residency in a state.
And since such changes in fiscal policy will require a unanimous approval by all EU members, the countries who currently benefit the most by offering lower taxes are likely going to resist this change.
In theory, if such a tax scheme becomes reality, it could raise seller fees. Most multinationals are going to pass on a tax increase to their customers.
As a EU based seller, it is wise to just keep an eye on this issue.
If you are in Europe, we’d love to hear your thought on this. Please use the comments section below.