September 8, 2018 / 11:17 AM / 14 days ago

France could accept compensating Ireland over EU digital tax: officials

VIENNA (Reuters) - France is willing to consider ways to compensate Ireland for possible lost revenue resulting from a proposed European Union tax on big internet companies, French officials said.

European Union finance ministers are aiming to agree on a tax on big companies’ digital turnover by the end of the year, amid an easing of doubts about the move in some countries.

Ireland, where many U.S. internet giants book their profits in Europe, much to the frustration of other countries like France, has so far been most opposed, French officials said.

“We are ready to give Ireland more of the revenues. It doesn’t seem illegitimate to give something to Ireland,” one French official said on Saturday.

Under a proposal from the European Commission in March, EU states would charge a 3 percent levy on digital revenues of large firms like Google and Facebook that are accused of routing their profits to the bloc’s low-tax states.

France has a lot riding on the tax as it is one of the key objectives of President Emmanuel Macron’s European agenda and he says it is necessary to show to voters that the European Union is capable of delivering concrete progress.

Eager to get other countries’ backing for the tax, French Finance Minister Bruno Le Maire proposed to his EU counterparts on Saturday at a meeting in Vienna the introduction of a “sunset clause” in the tax to ensure it is only temporary.

The idea is that the EU tax would cease to exist once the Organisation for Economic Cooperation and Development comes up with a long-term global solution to the taxation of internet companies, which is not expected before several years.

Irish Finance Minister Paschal Donohoe said that Dublin recognized the need for progress in the way digital companies are taxed, but that the solution should be at the global level.

Asked if more favorable treatment for Ireland in EU budget negotiations could change Dublin’s stance on the tax, he said that talks were already “exceptionally complicated and we are yet to move into the intense phase of those negations.”

“So I think there will be enough challenges there with for example Brexit and the differing views that the other member states have about the size of that budget,” he added.

The aim is to get an agreement on the tax before the end of the year when campaigning will get underway in full for European Parliament elections next May.

Reporting by Leigh Thomas; Editing by Alexander Smith

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