The leaked multiannual plans no longer mention a specific digital services tax, despite earlier announcements under the Digital Services Act (DSA). That legislation was designed to subject digital platforms like Facebook, Google, and X to stricter European rules.
Instead, the European Commission now aims to focus on new forms of taxation on corporate profits in a broader sense. This includes considering an adjusted profit tax for large international companies, but not explicitly targeting tech companies.
The new proposals are part of the search for new European revenue to repay joint EU pandemic debts. The new MFF package will be presented next week. Sources in Brussels indicate that the plans could still change at the last moment.
This shift comes at a time when US President Donald Trump has once again firmly positioned himself against European measures that he claims disadvantage American tech firms. Trump has sharply criticized the European DSA rules and accuses the EU of censorship and political interference.
At the same time, new US import tariffs on European goods are imminent. Trump announced that starting next month he wants to impose tariffs of 30 percent on EU and Mexican products, and 35 percent on Canadian goods. In that light, the European Commission appears to be taking a cautious stance in its financial and trade policy toward the US.
Although the Digital Services Act will remain in effect, requiring large tech companies to adhere to stricter transparency and other obligations, the MFF budget plans do not include a fiscal component that was previously considered. This suggests that earlier ambitions to financially tackle Big Tech have been scaled back.
Eliminating a separate digital tax also means other revenue sources will carry more weight. The European Commission is investigating contributions from emissions trading, customs duties on COâ‚‚, and adjustments to existing VAT agreements between EU countries, especially on tobacco. Together, these should provide structural funding for future EU expenditures.
The Commission’s proposal is not yet final and will be subject to political debate among EU countries and in the European Parliament in the coming months. Countries that have long advocated a robust fiscal approach to large tech firms may oppose abandoning this tax.