Q4/2019 - European Union

Brussels, 1 December 2019

Speeches by EU Vice President Margarethe Vestager, Copenhagen, 5 December 2019 and Brussels, 9 December 2019

The new European Commission started its work on 1 December 2019. In the new Commission, Vice President Margarethe Vestager will be the person who is mainly responsible for digital policy. Ms Vestager chairs a new intersectoral group of EU Commissioners, which is called “Commissioners’ Group on a Europe Fit for the Digital Age”. Margarethe Vestager presented core elements of her future policy in two speeches at the beginning of December 2019.

In a speech on the occasion of the 50th anniversary of the Internet on 5 December 2019 in Copenhagen, she said that the vision of the founders of the Internet, who considered “shared interests and values and not money” as vital for an “ethical, open, trusted, free, shared” Internet, no longer were in line with today’s realities. The Internet had become a place where power and money mattered and in which “the voices of CEOs and governments” were dominating. She added that neither state control nor monopolistic dominance could be the “European way”. Europe had to put the interests of its citizens, i.e. users and consumers, in the center: “In the face of corporate power and state power in the Internet, Europe’s approach should be based on a clear guideline: people’s power. The focus of our efforts must be to ensure citizens are empowered to take decisions on how their data are used, and that technology is developed to serve humans. The global Internet should be an open, safe and secure cyberspace where human rights and fundamental freedoms and the rule of law fully apply, with a view to societal well-being, economic growth and the integrity of free and democratic societies.”

In another speech on 9 December 2019 in Brussels, Vestager requested an innovative approach to a new competition policy that takes into consideration the changes the economy has experienced in the last two decades. The old mechanisms of competition policy which were based, among other things, on the prices of products and services, no longer worked. Instead, many of the new business models offered a complete ecosystem of services. The new digital platforms developing from them kept consumers tracked in proprietary systems. A modern competition policy had to be designed to breaking up these digital walled gardens[1].

Resolution des Europäischen Parlaments zu „Fair Taxation in a Digitalised and Globalised Economy“, Straßburg, 18. Dezember 2019

On 18 December, the European Parliament adopted a resolution concerning digital tax (Fair taxation in a digitalised and globalised economy). Never before has the European Parliament taken a more comprehensive position with regard to this controversial issue, which is primarily discussed in the WTO, the OECD and the G20.

The resolution refers to the discussion held at the OECD/WTO and requests the European Commission and the EU Member States to take an “ambitious EU position” in the upcoming negotiations about a fair mechanism for a global digital tax. The current practices of tax evasion and tax avoidance by large digital groups must come to an end.

The European Parliament regrets that no uniform position of all EU members has yet been reached and calls on the EU to speak with one voice in the future. In this context, the European Parliament encourages the European Commission to explore how a single position can be developed in the negotiations without requiring a unanimous vote of the European Council. It reminds of the European Commission’s proposals for a “Roadmap to qualified majority voting” of 15 January 2019.

The European Parliament calls on the new President of the European Commission, Ursula von der Leyen, to propose an independent EU solution for the digital tax, in case no international agreement has been reached by the end of 2020[2].

France had pushed ahead with a national digital tax in 2019, which led to fierce resentment and threats of sanctions from the USA. In the margins of the G7 summit in Biarritz, presidents Macron and Trump agreed to withdraw the French digital tax and the US sanctions threats if international agreement was reached within the OECD and the G20. In the meantime, Italy and several non-European countries have also announced their intention to introduce a national digital tax. The finance ministers of France and the USA, Bruno Le Maire and Steven Mnuchin, plan to meet on the sidelines of the Davos World Economic Forum in January 2020 to discuss how to proceed[3].

Mehr zum Thema
  1. [1] Margarethe Vestager, Rede auf der „Defining markets in a new age“ Konferenz, Brüssel, 9. Dezember 2019: „In our case involving Google’s Android mobile operating system, for instance, we had to deal with the fact that Android is accessible for free – so there’s no price that we could use for a SSNIP test. So instead, we asked ourselves what would happen if Google reduced the quality of Android a bit. And we found that this wouldn’t make consumers switch to Apple. Without a certain expertise, they might not register the lower quality; and if they did, then the costs of switching to Apple would discourage them from switching – costs like buying a new smartphone, downloading new apps and transferring their data in situations where providers don’t ensure portability. And because of this, we concluded that Google’s dominant position for licensing Android to smartphone makers wasn’t affected by the existence of Apple’s iOS. And digitisation also raises some more challenging questions for the way we define product markets. Very often, we find that big digital businesses don’t just provide one or two kinds of service. They’re often active in a whole range of different areas, providing consumers with an ecosystem of services, that are all designed to work together well. And as the special advisers pointed out in their report, it can be difficult for consumers to switch from one ecosystem to another. So there may be times when we also need to look at the way that these ecosystems can leave consumers locked in.“ In: https://ec.europa.eu/commission/commissioners/2019-2024/vestager/announcements/defining-markets-new-age_en
  2. [2] European Parliament resolution on fair taxation in a digitalised and globalised economy: BEPS 2.0 (2019/2901(RSP)), Straßburg, 18. Dezember 2019: „Conclusions: 35. Regrets the lack of a common approach at EU level vis-à-vis the current ongoing international negotiations; calls on each Member State and the Commission to make their positions publicly known on the OECD Secretariat’s proposals for Pillar One and Pillar Two; 36. Calls on the Commission and the Member States to agree on a joint, ambitious EU position for the OECD negotiations, ensuring that the EU speaks with one voice and leads by example to ensure a fairer allocation of taxing rights and a minimum level of taxation, allowing for fairness in the international tax environment in order to tackle tax evasion, aggressive tax planning and tax avoidance; 37. Invites the Commission to provide support in developing the EU’s position; invites the Commission to provide an impact assessment on revenues for every Member State for both pillars, including spill-over effects, in particular to safeguard the EU Policy Coherence for Development approach; calls on the Commission to inform the Council and Parliament of its findings; 38. Expects the Member States to share all relevant data that can be used to draft the most accurate impact assessments and relevant analysis with both the OECD and the Commission; 39. Strongly encourages the Commission and the Member States to achieve a deal at international level which would then be transposed at EU level through relevant EU and national legislation; likewise supports the commitment of the Commission President to propose an EU solution should an international deal not be reached by the end of 2020, on the condition that this EU solution is not limited to digital businesses; understands that such a solution would strengthen the single market by establishing a minimum level of tax that would prevent unilateral measures; 40. Recalls that the ongoing international corporate tax reform is composed of two pillars of equal importance and that those two pillars are complementary; calls, therefore, on the Member States to negotiate those two pillars as a unique package of necessary reforms; 41. Calls on the Commission and the Council to prepare the legal base for incorporating the outcome of an international deal into EU law and to present a legislative proposal as soon as possible; 42. Invites the Council, with the support of the Commission, to evaluate the criteria of the EU list of non cooperative jurisdictions for tax purposes once the international rules and/or the EU’s newly agreed reforms have been adopted, and to assess whether an update is necessary; 43. Calls on the Commission to explore the possibility of avoiding a legal base requiring unanimity in the Council; recalls the Commission’s contribution in its communication ‘Towards a more efficient and democratic decision making in EU tax policy’ proposing a roadmap to qualified majority voting; in:
  3. [3] U.S. and France Race to Conclude Digital Tax Talks as Tariff Threat Looms, New York Times, 7. Januar 2020, in: https://www.nytimes.com/2020/01/07/business/economy/us-france-digital-tax.html