Four countries – Germany, France, Italy and Spain – drafted a paper outlining their priorities ahead of last Friday’s (29 September) digital summit, where heads of state gathered in Estonia. Poland’s Digital Minister Krzysztof Szubert told EURACTIV.com the paper risks dividing EU member states on digital issues.
Szubert spoke with EURACTIV reporter Catherine Stupp in Estonia.
A group of four countries – Germany, France, Italy and Spain – took the lead and drafted a paper before this digital summit. Part of it focused on plans for a new tax on digital companies. Obviously, most EU member states were not part of this initiative. Did you agree with the priorities of the ‘big four’?
There are not so many differences, except maybe taxation and platform taxation, that’s probably the biggest difference. It was not the hottest topic three or four months ago. Now more countries are discussing platform taxation.
I compared the total economies of the four and the 17 [editor’s note: Poland led a group of 17 EU countries in June to send a letter to European Council President Tusk, asking for more prominent discussions on EU digital policy.] and they are more or less at the same level. We really have to decide if we’d like to create a digital single market or not. In general, we want to do that but if we’re all coming to discuss different details we’re not sure to do it. And we have different groups of countries coming with different ideas of how to do it or maybe not to do it.
In general, we support quite a lot of points from these four countries’ paper. It’s the same discussion we had with roaming, now maybe with the free flow of data or taxation. Someone will lose a little bit, others will win a little bit. This is the general question: do we want to think about the one big single market of 500 million people, or not really?
What Germany, France, Italy and Spain are pushing for is new legislation to tax digital companies based on revenue, instead of on profits in lower-tax countries. Poland is not one of the ten countries that signed the political statement supporting the new tax plans when finance ministers met last month.
From the tax perspective, we agree with most points within their proposal. But it’d be much more interesting to have this done through the OECD forum. We are basically against introducing the notion of digital taxes in the framework of both systems, CCCTB and CCTB. We are against this. The best would be to go through the OECD forum or discuss this equalisation tax. In general, I think we are all in the same position, that we see a need to tax digital companies in the place where they are generating profit. But the way we’ll do it and what type of tax it will be, and how high it will be, this will be discussed later on. This is different from the paper of four. We would like to do it this way.
Through the OECD.
Through the OECD or equalisation tax. It depends, because I’m not sure how fast we can be with this equalisation tax. It seems the equalisation tax might be faster than the OECD. So both ways.
How do you think taxing digital companies based on revenue would affect the EU digital single market?
There will be different factors. Probably for those companies, this is not the best situation that they will now have to pay some kind of tax in other countries, or maybe higher taxes. But we also believe that it can help other local innovators and companies to really build new platforms, more competitive platforms. From my perspective the level of the biggest platforms and the level of the business they are doing now, there is no competition. They are a kind of monopoly. At the moment it’s even too late for very big companies or investors to create something which is competitive to the platforms we have right now. We have the choice of using them or to be out of the digital discussion about platforms. This is what we have to do, to create big platforms in Europe because we don’t have ones that are known on the worldwide level.
It’s rare that EU heads of states get together to talk about digital policy like they are at this summit. Do you think the discussions about the digital single market are going in the right direction?
We have to really speed up and act because sooner or later, if we keep discussing this again and again, it might be too late to compete with other big economies. I see Europe as a big economy. Of course, there will be discussions about how particular countries will benefit from this, but it should be one holding competing with others.
I would like to see Europe be more integrated. Digital is very much something that can connect people, young people who are very open, and innovators. From the political perspective, it’s relatively easy to adopt.
But there are a lot of disagreements between member states about specific digital policy files.
Yes, digital is in some cases more fragmented than in old types of industries.
But when you look at the paper from the ‘big four’ countries, does that kind of initiative create a risk of fragmentation? Is there a risk that France, or a small group of countries, could drive a lot of digital initiatives?
In the end, when we started the discussion one-and-a-half years ago about the free flow of data, France was the country that was most against opening its market and having the free flow of data in place. My understanding was, and I still believe that, President Macron as a former digital minister will be much more open and maybe there will be some ideas for how to really create a digital single market in the end. It’s very interesting for all the governments and prime ministers now and with this digital summit, it’s good to see them taking an interest. We can expect there will be more countries that will be interested in leading this transformation.
So you’re not wary of a small group of countries taking the lead?
We started with this first letter many months ago, probably a half year ago to start this first discussion, and we closed it in June. [Editor’s note: the letter from 17 EU countries to Tusk.]
The invitation was very much open. No one from these four countries decided to join this club. They decided to create their own idea, which is not far from this letter. We can see there is some kind of unneeded idea to divide Europe in the digital area. Because we can only benefit when we do it all together. When it comes to technologies like 5G, we can only benefit when we do it all together. We won’t use it for calls, but maybe for autonomous cars travelling from one country to another country.
The Commission argues you can’t have 5G unless there is an overhaul of how radio spectrum is allocated across Europe. So far, member states refuse to agree to the Commission’s spectrum proposal.
From our perspective, the most important topic is the free flow of data and creating the legislative environment for innovators. And also creating something which will really connect the different initiatives across Europe. We will publish a study next week showing that we can really measure what the free flow of data means for economies.
For Poland, is the free flow of data legislation a way to balance out which European countries have stronger digital economies? Could you imagine that companies centred in, for example, France and Germany now might even relocate to Poland?
That’s also possible. Our economy depends on digital aspects or data-oriented aspects. Between 40-50% our economy depends on data at the moment. If we switch off computers and everything today, Poland’s GDP could drop 40%.
Poland was very supportive of the Commission’s free flow of data proposal, and so was Estonia. Is there an argument that it has something to do with being smaller economies in Europe, or being colder countries where it’s cheaper to store data. Are you going to benefit more than other member states?
All the economies will benefit. Some will win more, some a little bit. But in general, all will benefit. If Europe wants to be competitive to the rest of the world, this change will benefit all of us in different ratios.
We expect a big change. Especially for economies that were maybe not very advanced or were maybe not the biggest or the richest. They will probably benefit more. I think most of these countries from the 17 countries that signed the letter in the like-minded group, will benefit very much. We are the fifth economy in Europe at the moment. Together with the like-minded group, we are at least equal to the ‘big four’.
The big four paper also mentioned that there should be a new way of regulating online platforms. Do you think there needs to be a more coherent, broad approach to regulating online platforms?
It’s on the table. in general, we disagree with this proposal of the big four because we think we already have quite a lot of regulations in place. The idea is not to create borders and limit innovation. We don’t really support this.
So you don’t want more laws regulating platforms right now?
Not really, I think this is far enough right now. What’s important is that you have two big regulations, the GDPR (EU data protection regulation) and ePrivacy. We’re discussing ePrivacy a lot right now. From my perspective, the biggest transformation relating to the GDPR in Europe will be in Poland. We have to adopt more than 130 different pieces of legislation to really have it done. For us, it’s an extremely big step.
For us, it will be much easier and much better to wait a bit to see how it works before we start discussing other privacy-oriented laws. To not create more borders right now because that can stop innovation. We want companies to think about how to create more business, turnover, pay taxes. Instead of taking care of more administration and legislation. We want to motivate our European platforms to grow and be more competitive.