Major tech companies like Google and Facebook might soon be forced to pay higher taxes in Europe.
The European Commission proposed new rules Wednesday that would tax digital businesses where consumers are actually using the products, instead of just where the companies are headquartered.
Under this proposal, a company like Google would be eligible for taxation in any European country if it fulfills one of the following criteria there: it has more than 100,000 users; it earned more than $8.6 million in annual revenue; or it has more than 3,000 business contracts for digital services.
CNN reports this rule would prevent tech companies from getting away with paying less money in taxes by rerouting revenue to countries like Luxembourg that have more favorable tax laws.
The commission described it as a "preferred long-term solution." So in the meantime, it wants to impose a 3 percent tax on revenue generated from digital activities. It would apply to any tech business that generates more than $920 million in revenue worldwide.
