What Europe’s UN Tax Turn Means for Multinationals

European countries that once worked to keep the UN’s taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. negotiations from getting off the ground are now among the most active voices inside them. Germany, France, Estonia, and Belgium have moved from abstention to engagement, reportedly citing eroding trust in US tax cooperation, frustration with stalled digital-tax talks at the OECD, and fear of being absent if an agreement eventually lands.

On the surface, Europe’s engagement might look like momentum toward a serious agreement. But the goal every forum says it wants—a coordinated reallocation of net-income taxing rights over remote and digital services—is precisely the goal none has been able to deliver. There is little reason to think the UN would fare better than its predecessors, and several reasons to think it would fare worse.

Pillar One is the cautionary tale. It stalled not merely because of generic US skepticism toward international agreements, but because of specific distributional politics. Reallocating taxing rights means shrinking one country’s base to enlarge another’s, and it is nearly impossible to establish an enforceable consensus over the objections of countries that expect to lose revenue.