The European Union is raising red flags about a new tax rule hidden inside a U.S. budget proposal called the “Big Beautiful Bill”, backed by President Donald Trump. This bill includes a tax rule that could force foreign investors, including many from Europe, to pay a much higher tax on income they make in the United States.
According to the proposed law, these investors could be taxed up to 20% on their U.S. income. The tax would go up slowly—5% more each year—until it reaches that 20% limit. This would be on top of any regular taxes they already pay in the U.S.
Many in the EU believe this tax is a way for the U.S. to strike back at countries that are taxing large American companies. That includes major tech giants based in the U.S. Some countries in Europe, like Portugal, Denmark, and Poland, already have something called a digital services tax. These taxes are aimed at companies like Google and Facebook that earn lots of money online.
The EU’s executive body, the European Commission, is taking the issue seriously. They’ve made this tax part of their ongoing trade talks with the Trump administration, which began back in March.
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Ferber: EU Countries Are Being Targeted
Markus Ferber, a German member of the European Parliament and vice-chair of the tax subcommittee, says this tax is clearly aimed at Europe and other countries that have put taxes on U.S. companies.
He pointed out that the EU is following an international agreement from the Organisation for Economic Co-operation and Development (OECD). This agreement says that big companies must pay at least 15% in taxes, no matter where they say their profits come from. Over 140 countries agreed to this, including the U.S., although the U.S. has not yet passed it into law.
Europe has already made this rule official. So, when the U.S. now threatens to raise taxes on European investors, Ferber believes it’s payback for Europe doing what was agreed globally.
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He also warned that countries like the EU, which followed the global tax rule, are being treated unfairly by the U.S. because of this part of the Big Beautiful Bill.
The European Commission is pushing to put this issue on the table during current trade discussions. But Ferber says it’s still not clear if the U.S. has officially agreed to discuss this tax plan during the talks.
Trade War Tensions Are Growing
The tax issue comes while tensions are already high between the EU and the U.S. due to tariffs, which are extra charges on goods that cross borders.
The U.S. has already slapped 50% tariffs on EU steel and aluminium, 25% on European cars, and 10% on most other EU imports. These are huge increases and have caused a lot of concern among European businesses.
In response, the EU is ready with its own list of countermeasures. These are plans to place tariffs on about €115 billion worth of U.S. products. Some of these tariffs are already approved, while others are waiting for final sign-off from EU member states.
Right now, many of the EU’s tariffs are on hold until July. This delay gives both sides a chance to work things out and avoid making the trade fight worse.
The European Commission has said it is now including the new U.S. tax plan in these tariff talks. But it’s still unclear whether the U.S. side will agree to settle this tax issue as part of the bigger discussion.
