Win for Apple as EU Backs Down on Digital Services Tax

[MacRumors]

The European Commission appears to have reversed its plans to impose a significant digital tax on large technology companies, including Apple.

The change was confirmed in a draft document circulated within the European Commission late last week that was obtained by Politico. The document outlines potential revenue sources for the EU's next seven-year budget, covering the period beginning in 2028.

Notably absent from this list is the widely discussed digital services tax, which had been under consideration as recently as May. The tax was framed as a tool to ensure that large digital companies contribute fairly to the European economy.

Apple has faced increasing regulatory scrutiny in Europe and was among the primary targets of the now-abandoned proposal. The digital levy would have imposed additional taxes specifically on digital companies generating significant revenue from European users without being physically based in EU member states.

Instead of the digital services tax, the Commission now proposes three new levies: an EU-wide excise tax on tobacco products, a tax on discarded electrical and electronic equipment, and a corporate levy on large companies with annual EU turnover exceeding €50 million, such as Apple. The proposals will require unanimous approval from all 27 EU member states.

The timing of the change is widely understood to be linked to ongoing negotiations over a new transatlantic trade agreement between the EU and United States. According to Politico, the Commission's decision to withdraw the digital levy is seen as an attempt to avoid derailing trade negotiations with the United States and secure more favorable terms in a prospective agreement.

The finalized proposal for the EU's 2028–2035 budget is scheduled to be published on Wednesday, July 16. While the digital services tax remains off the table for now, the outcome of the upcoming trade talks with the United States and the ongoing DMA enforcement actions will continue to shape the regulatory environment for Apple in the European Union.

Note: Due to the political or social nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Win for Apple as EU Backs Down on Digital Services Tax

 

[Justin Cymbal]

wow. That’s a huge reversal.

This announcement came relatively quickly after Apple started their appeal:

Apple Challenges 'Unprecedented' €500M EU Fine Over App Store Steering Rules

Apple is appealing the 500 million euro ($570 million) fine that it is facing in the European Union for allegedly violating the Digital Markets...

www.macrumors.com

 

[Six0Four]

Thank God the multi-trillion dollar company is safe 😮‍💨

 

[UnbreakableAlex]

Noooo. Apple is already paying too little taxes!

 

[miniyou64]

Noooo. Apple is already paying too little taxes!

Why do you think the EU gov is entitled to Apple’s hard earned money?

 

[JapanApple]

Now that's one hell of a British tea party.

 

[con2apple]

wow. That’s a huge reversal.

This announcement came relatively quickly after Apple started their appeal:

Apple Challenges 'Unprecedented' €500M EU Fine Over App Store Steering Rules

Apple is appealing the 500 million euro ($570 million) fine that it is facing in the European Union for allegedly violating the Digital Markets...

www.macrumors.com

The DMA has nothing to do with the planned Digital tax.

 

[555gallardo]

As an European, I’m glad they backed down from the tax. Otherwise we would have 2GB Free iCloud storage tier instead of current 5GB.

 

[Shirasaki]

That’s a sad day for curbing the power of tech giants. I can only hope digital services tax is simply not the way to do things, not a sign of completely backing down on curbing their power and influence.

 

[macfacts]

Why do you think the EU gov is entitled to Apple’s hard earned money?

When you do business in a country, you normally pay taxes, but some companies are using a loophole (doing business "on the Internet") to avoid paying any taxes.

 

[Shirasaki]

Why do you think the EU gov is entitled to Apple’s hard earned money?

Why do you think Apple is entitled to operate in EU however they like with immunity? Or apply US laws on EU land?

 

[GrumpyCoder]

Why do you think the EU gov is entitled to Apple’s hard earned money?

For the same reason all the countries exporting to the US will have to start paying tariffs soon! ... oh wait... 🤦‍♂️

 

[senttoschool]

Why do you think Apple is entitled to operate in EU however they like with immunity? Or apply US laws on EU land?

Digital services tax doesn't mean Apple will be paying it. It's the citizens of EU who will pay for it. When will people learn?

It's like saying China will pay for the Trump tariffs when in reality, it's the people of the US through inflation.

 

[ozaz]

Why do you think the EU gov is entitled to Apple’s hard earned money?

Apple operates in EU countries and therefore uses EU infrastructure. It should contribute to the upkeep of this infrastructure by paying taxes at the same rate as smaller, local companies. However it uses its multinational status to engage in revenue shifting and other tactics to lower the taxes it owes in ways that are not available to smaller companies. This isn't an Apple-specific problem; it's a problem with multinationals in general although its easier for companies that earn revenue through digital services to engage in these practices.

 

[Shirasaki]

Digital services tax doesn't mean Apple will be paying it. It's the citizens of EU who will pay for it. When will people learn?

It's like saying China will pay for the Trump tariffs when in reality, it's the people of the US through inflation.

There’s a thing called corporate tax that corporations pay to the government. It won’t involve average individuals. Whether said corporation will pass on those taxes to consumers fully is another matter. Basically Apple relies on infrastructure provided by EU to operate in EU. Apple doesn’t own any country in EU zone outright.

How about this?

Of course tariff is an import tax on average consumers. That’s NOT corporate tax.

 

[iPadified]

That’s a sad day for curbing the power of tech giants. I can only hope digital services tax is simply not the way to do things, not a sign of completely backing down on curbing their power and influence.

EU take a passive stance against Trump tariffs which impact I much bigger than any digital tax.

 

[iPadified]

This isn't an Apple-specific problem; it's a problem with multinationals in general although its easier for companies that earn revenue through digital services to engage in these practices.

Hence "corporate levy on large companies with annual EU turnover exceeding €50 million". Actually much better than going solely after IT-Tech.

 

[Ctrlos]

This is merely a bargaining posture because of the 30% tariffs applied on EU goods by the USA in an attempt to cajole them into buying more US-made things. The EU cannot enter a trade war with the USA with reciprocal tariffs because it operates a $230bn deficit (ie it sells more things to the US than it buys back in return)

I'd be interested to hear from US users about this side of things. I mean no offence by this but there is a general opinion here in Europe (EU/UK) that American goods, particularly foodstuffs are made and grown to a lesser standard. I read about all sorts of stories about hormone-stuffed beef, chlorine-washed chicken and GMO crops but surely these things are on supermarket shelves in the USA already? What do US citizens think of their food?

 

[ginkobiloba]

This wasn’t directed at Apple specifically. The whole tax was conceived as a retaliation tool against Trump’s tariffs , to be used in negotiations.

 

[senttoschool]

There’s a thing called corporate tax that corporations pay to the government. It won’t involve average individuals. Whether said corporation will pass on those taxes to consumers fully is another matter. Basically Apple relies on infrastructure provided by EU to operate in EU. Apple doesn’t own any country in EU zone outright.

How about this?

Of course tariff is an import tax on average consumers. That’s NOT corporate tax.

So you basically agree that it's a tax on citizens of EU, and not Apple. One way or another, that tax is passed onto citizens.

What are you even arguing?

 

[iPadified]

So you basically agree that it's a tax on citizens of EU, and not Apple. One way or another, that tax is passed onto citizens.

What are you even arguing?

I think you simplify too much. Tax is also reducing the profit margins. Passing the whole tax to the customer will lead to less sales so there will be a balance.

 

[ItsASpider]

wow. That’s a huge reversal.

This announcement came relatively quickly after Apple started their appeal:

Apple Challenges 'Unprecedented' €500M EU Fine Over App Store Steering Rules

Apple is appealing the 500 million euro ($570 million) fine that it is facing in the European Union for allegedly violating the Digital Markets...

www.macrumors.com

That has nothing to do with this. This was a tax against digital services, which is just being replaced with a more generic tax.

The article acknowledges this, yet still describes it as a "win" when the end result for Apple will probably not be that different, it's just more companies that are now subject to it.

This is merely a bargaining posture because of the 30% tariffs applied on EU goods by the USA in an attempt to cajole them into buying more US-made things. The EU cannot enter a trade war with the USA with reciprocal tariffs because it operates a $230bn deficit (ie it sells more things to the US than it buys back in return)

That's not what a deficit means. The EU exporting more to the US than the US exports to the EU doesn't mean the EU somehow cannot operate without the US. It can just shift its exports elsewhere and/or start trading relations with other nations, as it has been doing for the past couple of months.

The US is going to see significantly more harm from the nonsense they're pulling, not just because the US will have a much harder time replacing their imports, but also because they're doing the same thing with pretty much every other nation. The EU can just put the work in to export to nations that don't have these tariffs against its goods, there's plenty of alternatives, it will just take time. But where's the US going to import from? They've raised these tariffs against every alternative, too, not something time is going to solve.

 

[con2apple]

Digital services tax doesn't mean Apple will be paying it. It's the citizens of EU who will pay for it. When will people learn?

So all taxes should be abolished because they are somehow paid by citizens?

I think you're American.
Shall I explain to you what a state is, what advantages it has, and how it is financed?
Here's a hint: not through large local companies.

 

[Xiao_Xi]

The EU cannot enter a trade war with the USA with reciprocal tariffs because it operates a $230bn deficit (ie it sells more things to the US than it buys back in return)

The EU has a surplus in trade in goods, and the US in services.

EU-US trade: how tariffs could impact Europe | Topics | European Parliament

What will happen if the US imposes extra tariffs on EU products? Find out the facts about EU-US trade and what the EU could do in case of a trade war.

www.europarl.europa.eu

Digital services tax doesn't mean Apple will be paying it. It's the citizens of EU who will pay for it.

From page 11 of Towards a European Digital Service Tax: Renewing the momentum for a fair contribution.

A DST is a levy imposed on revenues generated from specific digital activities, rather than on corporate profits. Unlike traditional corporate tax systems, which depend on where a company is headquartered or where profits are reported, a DST applies directly to revenues earned in the jurisdictions where digital services are consumed. The primary objective of a DST is to address the tax issues posed by large multinational digital businesses operating across borders with minimal physical presence. These companies, which often rely on intangible assets and digital platforms, can shift profits to low-tax jurisdictions, minimising their contributions to public finances in countries where they generate economic value. By taxing revenues at the point of user engagement, a DST seeks to ensure a fairer distribution of tax liabilities.

https://aboutblaw.com/bhIM [PDF]

 

[NightFox]

Digital services tax doesn't mean Apple will be paying it. It's the citizens of EU who will pay for it. When will people learn?

It's like saying China will pay for the Trump tariffs when in reality, it's the people of the US through inflation.

Maybe 'people' understand basic economics - you can't just hike the price the consumer pays for a product without it having a negative impact on sales, regardless of whether that price increase resulted from a net increase or a tax increase. If Apple could sell a device for €10 more than they already do without it negatively impacting sales volumes, then they would already be doing so. Companies tend to have to absorb costs like this, and in some cases it can even lead to them having to reduce the gross selling price if they have to look to sell more products to compensate for reduced profit margins, it just depends where the pricing and demand curves cross.