Adevinta CEO Antoine Jouteau, Schibsted CEO Kristin Skogen Lund, Vinted CEO Thomas Plantenga and Allegro CFO Jon Eastick are among 15 executives of European tech companies that have written to EU Finance Ministers under the umbrella of industry body the EU Tech Alliance — which Skogen Lund is president of — asking them to work towards the introduction of a global corporate tax solution for tech companies as an alternative to digital service taxes (DSTs).
DSTs are taxes on gross revenue derived from a variety of digital services. As of the beginning of this year, they had been implementing seven EU member states — Austria, France, Hungary, Italy, Poland, Portugal and Spain — while Belgium, the Czech Republic and Slovakia have published proposals to enact them.
According to the letter, which is dated 7 July, “As leading homegrown European technology companies, we see directly the need to put an end to DSTs and other similar measures.”
“DSTs give rise to significant legal, technical, political and trade challenges … [They] are a blunt policy tool intended to target large and highly profitable companies. However, DSTs tax gross revenues, not profits; they apply regardless of a company’s profitability. This has a disproportionate impact on European technology companies, resulting in an unlevel playing field.”
“DSTs lead to unrelieved double, and even multi-layer, taxation. This occurs where revenues are already subject to corporate income tax, value-added tax (VAT) and/or other unilateral tax measures in the same or other jurisdictions.”
“These measures have created instability in the international tax system and pose substantial harm to economic growth, investment, innovation and employment. European technology companies are disproportionately impacted by DSTs, impeding their expansion and hindering their ability to effectively compete with their global counterparts.”
“Revenues play a pivotal role in the growth and scalability for most businesses. DSTs hit companies at the early stages of growth — particularly ones that are not yet profitable — and those with low margins hardest.”
It adds that the OECD’s Pillar One work on global tax reform “presents an opportunity for a fairer and more stable international tax framework, which taxes economic profits, avoids double taxation, increases tax certainty through effective dispute prevention and resolution mechanisms and puts an end to DSTs and other similar measures.”
Other signatories of the letter include Spotify CFO Paul Vogel, Zalando CEO Robert Gentz, Delivery Hero CFO Emmanuel Thomassin and Booking.com CFO Sue D’Emic.