Germany plans to impose a 10% digital tax on tech giants like Google.
As German Chancellor Merz is about to meet Trump, Germany's new Minister of Culture Wolfram Weimer stated 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 openly accused these platforms of &#34;clever tax avoidance&#34; and expressed a desire to negotiate with platform operators to explore alternative solutions such as voluntary contributions. Weimer stated:
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&#34;These companies conduct 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, invest insufficiently, and give back to society very little.&#34;
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<h2>Why is Germany taking action?</h2>
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.
Weimer criticized in the interview that these platforms have built a &#34;monopolistic structure&#34; that not only restricts competition but also excessively concentrates media power, posing a potential threat to freedom of speech:
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&#34;If Google, under pressure from Trump, unilaterally renames the Gulf of Mexico to 'American Gulf,' it can do so solely based on its ability to shape global communication, which reveals the deep-seated issues of the current structure.&#34;
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It is noteworthy that Germany's ruling party agreed earlier this year in a coalition agreement to impose such a digital services tax, and the newly formed government earlier this month does not seem to have changed this plan due to Trump's trade threats.
If implemented, Germany will join the ranks of the UK, France, Italy, and other countries in taxing digital service revenues within its borders.
<h2>Renewed concerns over US-EU trade war</h2>
The greater risk of Germany's move is that it may escalate trade disputes with the United States.
According to previous media reports, during Trump's first term, the U.S. Trade Representative's Office initiated &#34;Section 301&#34; investigations against several countries implementing digital services taxes, determining that these measures discriminate against U.S. companies and paving the way for retaliatory tariffs on specific imported goods; in February of this year, Trump ordered his trade officials to restart these investigations, aiming to impose tariffs on imported goods from countries that levy digital services taxes.
More notably, reports indicate that Chancellor Merz is about to travel to Washington to meet with President Trump, and the German Ministry of Culture's visit will undoubtedly add more variables to the tax dispute.
Trump has previously made it clear that he will not allow foreign governments to &#34;encroach on the U.S. tax base for their own benefit.&#34;
Market analysts warn that if Germany insists on pushing this tax plan, the U.S. may quickly retaliate with tariffs, harming Germany's export-oriented economy and subsequently affecting overall market sentiment in the Eurozone.
<h2>What does a 10% tax rate mean?</h2>
The proposed 10% tax rate will directly target the sales revenue of large digital platforms within Germany. Considering the significant scale of Google and Meta in the German market, this tax rate could generate hundreds of millions of euros in additional fiscal revenue.
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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, the global profit margins of tech giants will face significant pressure, and stock price fluctuations are 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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Europe strikes back at American tech giants, Germany considers imposing a 10% digital tax