The European Commission estimates it could collect roughly $5.8 billion every year by imposing a 3% Digital Services Tax on firms generating over $750 million in annual global revenue, according to a June 4 commentary published by Americans for Tax Reform. The advocacy group warns that the proposed EU-wide tax represents a grave threat to digital commerce and American companies. The commission announced these revenue projections on June 2, signaling a push for independent funding that would bypass member states.
Beyond the headline digital services levy, the European Commission is also considering a 3% tax on online gambling and a 0.1% tax on cryptocurrency transactions, projected to generate €1.9 billion and €3-4 billion respectively. Within the last nine years, ten European countries have already implemented their own digital services taxes, with Poland attempting to expand its existing DST. Seven other countries are either considering or actively developing similar taxes. The Tholos Foundation found that over 60% of firms liable for DSTs in Spain and Turkey were American companies. U.S. tech firms already pay nearly $3 billion annually due to existing digital services taxes—a figure that could double by 2030.
According to the report, Andreas Hellmann of the Tholos Foundation characterized the tax proposition as a "first step to more European Union independence"—independence from the EU's own member states. Americans for Tax Reform argues that investigations by the United States Trade Representative found DSTs enacted across Europe unfairly target American companies and restrict U.S. commerce. The organization states that when the UK implemented its 2% DST in 2020, Google, Amazon, and Apple all raised advertising charges, marketplace fees, and app store commissions by 2% respectively, passing the cost directly to consumers.
The report explains that the cost of digital services taxes ultimately falls on everyday users rather than tech giants, despite the framing around making companies pay their "fair share." Americans for Tax Reform contends that DSTs violate fundamental taxation principles because European countries didn't provide the institutional infrastructure for U.S. tech firms' success, making revenue seizure unjustified. The organization characterizes these taxes as a "perverse form of taxation" stemming from the OECD's "Pillar One" international taxation framework, which shifts tax burdens from production sites to consumption locations. For millions of Americans using these platforms, the report argues, this represents taxation without representation similar to what colonists fought against 250 years ago.
The advocacy group calls on President Trump to not only reiterate opposition to DSTs but threaten tangible retaliation measures to protect consumers. The report notes that under Section 301 of the 1974 Trade Act, the United States Trade Representative can investigate and retaliate against foreign countries that unfairly burden American commerce. The Trump Administration has already sent strong messages opposing digital services taxes, and Americans for Tax Reform warns that the EU needs to learn that citizens aren't "simply an ATM from which they can draw cash." The bottom line: a bloc-wide digital services tax would create an independent EU revenue stream funded largely by American companies and their customers worldwide.