Europe strikes back at US tech giants, Germany considers 10% digital tax

**Source**: Wall Street Insights  

Germany Plans to Impose 10% Digital Tax on Google and Other Tech Giants  

As German Chancellor Merkel is set to meet with Trump, Germany’s new Minister of Culture, Wolfram Weimer, said in a media interview on Thursday that his department is drafting a legislative proposal to impose a 10% digital services tax on large online platforms such as Google and Meta.  

Weimer bluntly accused these platforms of "sophisticated tax avoidance" while stating that he is seeking negotiations with platform operators to explore alternative solutions such as voluntary contributions. Weimer said:  

"These companies conduct tens of billions of euros in business in Germany, enjoy extremely high profit margins, and benefit greatly from German media, cultural content, and infrastructure, yet they pay almost no taxes, make insufficient investments, and contribute minimally to society."  

Why Is Germany Taking Action?  

As the economic core of the eurozone, Germany has long been dissatisfied with the phenomenon of tech giants earning huge profits locally while paying almost no taxes.  

In the interview, Weimer criticized these platforms for constructing "monopolistic structures" that not only restrict competition but also overly concentrate media power, posing potential threats to freedom of speech:  

"If Google, under Trump’s pressure, unilaterally renames the Gulf of Mexico as the 'Gulf of the United States,' it could do so solely through its ability to shape global communication norms. This reveals the deep-seated problems with the current structure."  

Notably, Germany’s ruling parties had already agreed to impose such a digital services tax in a coalition agreement earlier this year, and the new government that took office earlier this month appears not to have altered this plan despite Trump’s trade threats.  

If implemented, Germany would join countries such as the UK, France, and Italy in taxing digital service revenues within their territories.  

Renewed Concerns About a U.S.-EU Trade War  

The greater risk of Germany’s move lies in the potential to escalate trade disputes with the U.S.  

According to previous media reports, during Trump’s first term, the U.S. Trade Representative’s Office launched "Section 301" investigations into multiple countries that imposed digital services taxes, determining that these measures discriminated against U.S. companies and paving the way for retaliatory tariffs on specific imported goods. In February of this year, Trump ordered his trade chiefs to restart these investigations, aiming to impose tariffs on imports from countries that levy digital services taxes.  

Of further note, it is reported that Chancellor Merkel will soon travel to Washington to meet with President Trump, and the German Ministry of Culture’s initiative will undoubtedly add more variables to the tax dispute.  

Trump has previously made clear that he will not allow foreign governments to "encroach on America’s tax base for their own interests."  

Market analysts warn that if Germany insists on advancing this tax plan, the U.S. could quickly retaliate with tariffs, impacting Germany’s export-oriented economy and, in turn, overall market sentiment in the eurozone.  

What Does a 10% Tax Rate Mean?  

The proposed 10% tax rate would directly target the sales revenue of large digital platforms in Germany. Given the massive scale of Google and Meta in the German market, this rate could generate hundreds of millions of euros in additional fiscal revenue.  

For investors, the more critical question is whether this tax burden will be passed on to advertisers and users, ultimately driving up the cost of digital services. More importantly, this tax could trigger a chain reaction: if other countries follow suit, tech giants’ global profit margins will face significant pressure, and stock price volatility may be inevitable.  

Currently, Alphabet and Meta have not responded to the tax proposal, but the market has already begun to digest the potential uncertainties.  

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