New government to drawing-up 10% digital advertising DST
The new Merz Federal government is considering a 10% levy on large digital platforms such as Google and Meta. In the current global tax regime, such digital platforms are able to sell data, advertising and marketplace services on a non-resident basis without being subject to local income taxes. Digital Services Taxes are sales taxes on this services to breach this ‘tax gap’.
The German proposal, contained in the Union and SPD coalition agreement, may follow the Austrian 5% DST on advertising services, in place since 2020.
US targets discriminatory DST’s
Such Digital Services Taxes in Europe and beyond are now under investigation by Trump presidency. The US White House believes DST’s are discriminatory against large US digital companies, particularly because they come with high annual thresholds which preclude all but their companies.
There is common acceptance that DST’s are poorly designed, and are a stopgap.
This has led to countries with DST’s in place to reposition or even withdraw them, including the UK DST, Italy and India’s Equalisation Levy.
Germany to copy Austrian digital advertising tax?
Austria applies its DST to online service providers with global revenues exceeding €750 million and at least €25 million in Austrian online advertising revenues. The tax is levied on the remuneration received for services such as banner ads, search engine marketing, and comparable formats, provided the advertising is targeted at users with Austrian IP addresses.
Breakdown in global renegotiation
Attempts for a global rewriting on the territorial rights to tax such remote services in the OECD Pillar 1 talks are stalled following the US decision in February to withdraw from the talks.
Europe Digital Services Taxes (DST)
| Country | Status | Rate | Annual sales threshold | Scope | |
| In-country income | Global income | ||||
| EU Digital Levy | Paused | 3% | EU €50m | €750m | Marketplaces; advertising |
| Austria | Jan 2020 | 5% | €25m | €750m | Advertising |
| Belgium | 2027 | 3% | €5m | €750m | Advertising; Intermediation; Data Transmission |
| Czech | Proposed | 5% | CZK 100m | €750m | Advertising; digital services |
| Denmark | Jan 2024 | 2% | Streaming video | ||
| France | Jan 2019 | 3% | €25m | €750m | Digital interface; advertising; user data |
| Germany | TBC | 10% | €25m | €750m | Digital advertising |
| Greece | Jul 2019 | Nil | n/a | Tourist accomodation | |
| Hungary | Jul 2019 | 0% to Dec 2022; then 7.5% | HUF 100m | n/a | Media content; Advertising |
| Italy | Jan 2020 | 3% | Nil | €750m | Advertising; digital interfaces; user data |
| Latvia | Paused | 3% | €750m | Digital interface; advertising; user data | |
| Norway | Paused | Subject to progress on OECD plans | |||
| Poland | Jul 2020 | 1.5% | Streaming media and Audiovisual media service and audiovisual commercial communication | ||
| Poland 2 | Proposed | 7% | Digital services | ||
| Portugal | Feb 2021 | 1.5% | Video-sharing platforms and subscription TV streaming (1%) | ||
| Portugal 2 | Proposed | 7% | Streaming video services | ||
| Slovenia | Proposed | Advertising; user data | |||
| Spain | Jan 2021 | 3% | €3m | €750m | Advertising; user data |
| Turkey | Mar 2020 | 7.5% | TRY 20m | €750m | Advertising; Content; social media |
| UK | Apr 2020 | 2% | UK £25m | £500m | Marketplaces; Social media; search engines |
