The digital services tax disappears from the European Commission’s draft budget for 2028–2035, seen as a gesture towards the United States amid ongoing transatlantic trade negotiations.
The European Commission has decided to abandon, at least for now, its plans to impose a specific tax on digital services, a measure targeting tech giants like Apple, Google, Meta, and Amazon. According to an internal draft obtained by Politico, the tax—once considered almost certain just a few months ago—has been removed from the document outlining funding sources for the upcoming EU budget framework (2028–2035).
This shift marks a significant victory for Apple, which has been under intense European regulatory scrutiny and was one of the main targets of the proposed tax. The tax aimed to levy large digital platforms that generate substantial revenue in Europe without a proportional physical presence in member states.
Instead, the Commission now proposes three new levies: a European-specific tax on tobacco products, a fee on electronic waste, and a corporate surcharge for large companies earning over €50 million annually within the EU.
Diplomatic key point: avoiding friction with Washington
The European retreat comes at a sensitive moment in EU-US relations. Sources close to negotiations interpret the removal of the digital tax as a political gesture to prevent tensions in the ongoing transatlantic trade agreement discussions. Brussels seeks to ensure favorable conditions with the U.S. administration and avoid unilateral fiscal reprisals.
Although the draft still requires unanimous approval from the 27 member countries—a process often politically delicate—the complete disappearance of the digital tax from the proposal list is a clear sign of a change in direction.
Apple, among the main beneficiaries
Apple was particularly exposed to this measure. The U.S. company not only leads the European market in sectors like smartphones and subscription services but also has a highly digitalized business model centered in the U.S., which made it a prime target for such a tax.
While the company still faces the Digital Markets Act (DMA), which regulates key aspects of its ecosystem like the App Store, this decision provides significant financial and strategic relief. For now, Apple sidesteps a new fiscal front in Europe.
A withdrawal that doesn’t end the debate
Despite exiting the draft budget, the idea of a European digital tax remains a topic in political discussions. Countries like France and Spain have previously advocated for this measure as a way to balance taxation between the digital and physical worlds and to ensure big tech companies contribute fairly to public finances.
Some analysts suggest that such a levy could re-emerge later if progress in international tax reforms within the OECD framework stalls.
Next key date: July 16
The European Commission plans to publish the final budget proposal on Wednesday, July 16. Until then, last-minute nuances or adjustments are possible. However, everything currently indicates that the digital tax will not be part of the EU’s fiscal architecture for the upcoming budget cycle, marking a notable shift in the EU’s approach to big tech taxation.
The European Commission’s decision to exclude the digital tax from its budget proposal represents a geopolitical move with fiscal and trade implications. Apple and other major tech companies benefit, but the debate over digital economy taxation in Europe remains open.