European digital tax failed due to Denmark, Sweden, Estonia, and Ireland. Now Austria is going it alone.

Austrian Tax Policy

The EU finance ministers wanted to commit to a uniform line on digital tax in Brussels on Tuesday. However, the project failed because of resistance from Denmark, Sweden, Estonia, and Ireland. Now Finance Minister Hartwig Löger (ÖVP) wants to implement the first national measures to tax digital companies from the beginning of 2020. In January 2020, there will be a chance for an online advertising fee, said Löger on Tuesday in Brussels. This tax would hit primarily the US companies Google, Amazon, and Facebook.

Austria had already done preparatory work for an online advertising tax, it could also be implemented quickly on the legislative level, said Löger after the meeting. He also wants to take greater account of intermediary platforms in the sharing economy, such as Airbnb. This year, the legal framework for information obligations and liability for lost taxes will be defined.

Löger expects more than half of the EU countries to take national digital taxation measures. France has already reported, as reported, last week in its own model.

However, with this approach, Europe is causing trouble for the US. The US government threatened to file a complaint with the World Trade Organization (WTO) on Tuesday. The US commissioner for international trade talks, Chip Harter, said in Paris, one investigates the “discriminatory effect” of such a digital tax. The project was “immature” and its effect was “highly discriminatory for multinational corporations” from the United States.

Minister of Finance Löger spoke after the Council meeting in Brussels in the face of the failure of a “sad hour” for Europe. In addition to the Austrian digital levy, in the future parcel deliveries from abroad (especially from China) will incur import turnover tax “from the first cent”. Currently, such items are tax-free up to 22 Euro value of goods. There are “noticeable many shipments that are close to this limit,” said Löger and spoke of detected fraud cases.

However, this is not an Austrian initiative. Rather, the Minister only pledged to implement the EU VAT Directive, which was amended in Brussels at the end of 2017, more quickly than Austria would have been obliged to do anyway. This amendment stipulated that exemption from import VAT on shipments from third countries to the EU should be abolished by the Member States up to the limit of EUR 22 from the beginning of 2021.