EU considers broad corporate levy to fund budget and avoid US tariffs

The European Commission is exploring new ways to fund its next long-term budget while avoiding potential trade tensions with the United States. One proposal under consideration is a broad levy on all large companies generating over €100 million in annual EU revenues, regardless of industry. This lump-sum contribution would differ from previous digital services taxes (DSTs) by applying across sectors, including manufacturing, retail, finance, and tech.

The idea emerged from discussions on October 7, 2026, as part of negotiations for the 2028-2034 Multiannual Financial Framework. The Commission aims to sidestep US threats of up to 100% tariffs on countries imposing DSTs, which Washington views as targeting American firms. However, some EU member states remain cautious due to concerns about backlash from US interests.

Estimates for potential revenue vary significantly. The European Parliament suggests new digital taxes, including provisions for online gambling and crypto-assets, could generate around €25.2 billion annually. This is far above the Commission’s estimate of €5 billion, implying a seven-year revenue projection of about €175 billion. The inclusion of crypto-assets highlights Brussels’ interest in the sector as a revenue source.

This is not the EU’s first attempt at digital taxation. A targeted DST was proposed in 2018 but shelved to prioritize global negotiations at the OECD. With those talks stalled, some member states have implemented their own DSTs, creating a fragmented tax landscape. A decision on EU-level measures is expected by year-end 2026, aligning with budget negotiations.