Are the EU institutions planning to introduce in the following years the European Digital Services Tax(DST) to increase the EU’s budget? In the last few weeks, different stakeholders have started discussing the concept of introducing an EU-wide digital services tax as a new source of revenue that will significantly increase the EU’s budget.
The EU is entering a budget negotiation phase. The projected framework for the budget 2028-2034 needs to rely on new sources of income, and one of those that could be back in the picture is the European DST. The idea for the introduction of the European DST isn’t a new one; it has been in the air for many years.
It was confronted with national vetoes, OECD negotiations, potential political escalations with transatlantic partners, and “fear” of some Member States.
European DST Review
The introduction of the Digital Services Tax isn’t a new idea. In 2018, the EU Commission proposed the introduction of the EU DST at the rate of 3% on specific types of digital income generated by large platforms. The idea behind the policy was clear to adapt direct taxation model that aligns with the income flow in the era of the digital economy.
The project failed in the end, as several Member States were against it, and then OECD framework negotiations came into the picture as an equally good response.
Budgetary Support Unit(unit that is part of the EU Parliament) issued a briefing in June 2026 related to the different implications of the “potential” introduction of the European DST.
The conducted research indicates that the introduction of the European DST could be of great economic benefit for the EU budget.
The Commission estimates that a European digital services tax at 3% would bring around €5 billion per year into the Union budget. It built this projection from the revenues observed in 2024 in France, Spain and Italy, then extrapolated them to the European scale according to the Union’s economic weight.
The introduction of the European DST will eliminate the fragmentation in this regard that reigns today, considering that there are countries such as Italy, France, Spain, and Austria that have introduced some form of the DST, and other Member States that are planning to mandate a similar policy, and those that are “still” against such a levy.
This is a positive economic response if the European DST is introduced. However, there are numerous pivotal parameters that need to be considered for such a major reform. Some of the questions that need to be addressed are: how will the European DST influence the competitiveness of the EU’s digital economy; what influence will it have on the EU-US trade consideration, considering that most of the digital platform operators that will “bear” the tax accountability are based in the US?