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EU Denies Softening Its Approach To US Tech Giants Amid Trump Administration Threats

The European Commission has dismissed reports suggesting it plans to ease its stance on US tech giants, despite potential retaliatory actions from President-elect Donald Trump’s administration. EU Commissioner for Digital and New Technologies, Henna Virkunen, emphasized in an interview with CNBC that the EU would continue to enforce its technology regulations firmly.

Key Developments

  • Virkunen confirmed that the European Commission would maintain its current regulatory course and ensure strict enforcement across the technology sector, regardless of political developments in the US.
  • As a new appointee under Ursula von der Leyen, Virkunen’s comments underline the EU’s commitment to holding major tech companies accountable, including through antitrust scrutiny.
  • The EU has led the charge in tech regulation, launching a series of legislative measures such as the Digital Services Act (DSA), designed to increase oversight of the tech industry.

When asked about the potential influence of Donald Trump’s administration on the EU’s policies, Virkunen made it clear that the EU’s position is rooted in a “very clear legal basis for regulation.” She added that all companies—whether based in the US, Europe, or China—must adhere to EU laws.

The Digital Services Act: A Key Tool For Regulation

Virkunen noted that the Digital Services Act (DSA), which fully comes into effect in 2024, grants the EU significant powers to regulate the operations of large tech platforms. This includes addressing illegal activities, and harmful content, and tackling online disinformation.

Currently, Meta, Instagram, X, and TikTok are facing ongoing investigations as part of formal proceedings under the DSA. Virkunen emphasized that no new decisions or changes have been made yet regarding the investigations, signalling the EU’s resolve to proceed with its regulatory agenda.

Meta’s Moves And The EU’s Regulatory Stance

The possibility of a shift in the EU’s approach gained attention following Meta’s announcement that it would discontinue its fact-checking programs in the United States for its platforms, including Facebook, Instagram, and Threads. The timing is notable, coming just after Meta brought key figures from Donald Trump’s circle into its leadership. However, it remains unclear whether this change will impact fact-checking operations in the EU, which could face separate scrutiny under the Digital Services Act.

Rumours Of A Softer Stance And Potential Economic Fallout

The Financial Times recently reported that the European Commission might reconsider its aggressive stance toward US tech companies. This includes a possible reduction or modification of investigations and potential fines under the Digital Services Act and Digital Markets Act. According to the report, a review of these cases could lead to freezing decisions and delaying penalties until the process concludes.

Concerns over retaliation from the US have circulated within the EU, especially considering Trump’s past threats to impose higher tariffs on European goods. There are growing fears that a tough approach toward US tech giants could provoke trade tensions and disrupt EU economic growth. The stakes are particularly high in areas such as artificial intelligence regulation, where the US and EU are competing for global leadership.

Despite these pressures, Virkunen and the European Commission have made it clear that they will not back down on their commitment to holding tech companies accountable for their actions within the EU.

EU E-Commerce VAT Systems Generate €257.9 Million Revenue for Cyprus in 2024

Robust Revenue Growth Through Streamlined VAT Collection

Cyprus has demonstrated a significant fiscal boost in 2024 with €257.9 million generated from the European Union’s e-commerce VAT systems, according to Tax Commissioner Sotiris Markides. This impressive performance underscores the effectiveness of the One Stop Shop (OSS) and Import One Stop Shop (IOSS) frameworks in simplifying cross-border tax compliance.

Simplified Procedures for EU and Non-EU Businesses

The OSS system allows Cyprus-registered businesses to streamline VAT declaration and payment on sales to consumers in other EU countries. Companies simply register on the local OSS platform, apply the consumer’s VAT rate, aggregate their submissions quarterly or monthly, and remit a single consolidated payment. Subsequently, Cyprus allocates the appropriate share to each respective EU country. This efficient process extends to non-EU sellers as well, who can have their intra-EU distance sales managed under the Union Scheme.

Breakdown of VAT Revenue Streams

Last year’s declarations under the various schemes illustrate the system’s broad reach: €217.9 million was collected via the Union Scheme, €36.9 million through the Non-Union Scheme, and €3.1 million via the Import Scheme. While the Union Scheme caters to both EU and non-EU sellers engaging in distance sales, the Non-Union Scheme specifically accommodates non-EU firms delivering services to EU consumers. Furthermore, the Import Scheme targets goods valued at less than €150 that are imported from outside the EU.

Implications and Broader Impact

Implemented in July 2021 as an evolution from the more limited MOSS system, these reforms have not only consolidated tax collection through an expansive OSS but also integrated the IOSS for low-value imports. By designating certain online marketplaces as “deemed suppliers,” the new framework ensures that VAT collection is both efficient and equitable. Across the EU, these mechanisms have generated over €33 billion in VAT revenues in 2024, reflecting a successful effort to simplify tax compliance, reduce administrative burdens, and promote fair taxation across the bloc.

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