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Vienna, 22.01.2018 Austrian Finance Minister Löger attends first Eurogroup and Ecofin meetings in Brussels: Digital office and the future of Economic and Monetary Union to be discussed

Austria's new Finance Minister, Hartwig Löger, will first and foremost urge implementation of a digital office in a European format during his first attendance at the EU Council of Finance Ministers (Ecofin) on Tuesday in Brussels. Indeed, ahead of the Eurogroup on Monday, Löger will also raise the subject with colleagues including EU Taxation Commissioner Pierre Moscovici.

Digital office

At present, on average, European companies with digital business models are subject to an effective tax burden of just 9%. By contrast, traditional business models bear a tax burden that is almost twice as high. In cases where mainly intangible assets are used, the tax burden may indeed approach zero, notes Löger with concern. "The current international tax system is lagging behind the digital age," he adds, pointing out that this becomes particularly clear in instances where major digital corporations can avoid taxes at no great expense. "This injustice must quickly be brought to an end. And profits must be taxed where added value is created," stressed Löger. Austria would advocate appropriate solutions at both European and bilateral level, but would also, if needed, contemplate an approach at national level.

"At present, there exists no basis for taxation, even if international companies which have digital business models, ranging from data gathering to exploitation, achieve added value in Austria. We must respond to this. The approach devised by the new Austrian federal government is based on the particular business model of a company; taxation does not begin with the gathering of personal data, but only when such data is used for gainful purposes. For this is also linked to increased output and the creation of added value in Austria," explains Löger.

Thus, in Austria, profit will only be subject to income tax when it has been achieved by a digital office in Austria through associated value added. Since multiple taxation of one and the same profit in different States should be avoided, a procedure agreed internationally, or at least at European level, would be desirable. Otherwise, the danger would exist that the digital business sector, in particular the IT start-up scene, would be stifled at national level, clarifies Löger, underlining the Austrian standpoint.

Initial discussions

In addition to Moscovici, Löger will also be meeting with the Vice-President of the European Commission, Valdis Dombrovskis, Austrian Johannes Hahn, EU Commissioner for European Neighbourhood Policy, Peter Altmaier, interim German Finance Minister, and the new Finance Minister of the Netherlands, Wopke Hoekstra. The discussions will also centre around preparation for Austria's EU Council Presidency in the second half of 2018.

"More visions rather than functions"

At the Ecofin Council, on the topic of deepening Economic and Monetary Union, Löger aims to advocate "more common visions rather than additional functions or structures". "The main thrust is the right one, especially with regard to integration of the Fiscal Pact into EU law or conversion of the European Stability Mechanism (ESM) into a European Monetary Fund (EMF). On other areas, such as the creation of a Eurozone Finance Minister, we need more time, since here, we are already talking about functions when we have not yet agreed on common goals and tasks," concluded Minister Löger.