EU’s CORE Proposal: A Clumsy Levy That Hurts Growth and Targets US Companies

The European Commission’s recently announced ‘2028–2034 EU budget’ proposal has sparked concern, continuing Brussels’ pattern of anti-growth policymaking. Central to these fears is the proposed introduction of “Corporate Resource for Europe” (CORE). European lawmakers describe CORE as a financial contribution, attempting to hide what it really is: an expansion of the EU’s powers to tax corporations, and a clumsy one at that.

Under CORE, companies operating in Europe would be required to pay a lump-sum tax, corresponding to set turnover thresholds. These thresholds encompass four arbitrary ranges between €100 million and  €750 million, making the lump-sum nature of the tax highly confusing. For instance, a company making €100 million in turnover would be charged €100k, while a company making €249 million would still fall below the second threshold of €250 million, requiring them to pay the same €100k. As a company crosses a threshold, its payment jumps sharply, penalizing growth and creating an incentive for companies to remain below tax thresholds.

Beyond the structure of the tax, the targeting of turnover is an equally puzzling decision. Corporate taxes are typically based on profits, taking more from highly profitable companies and lowering burdens for companies running on thin margins—such as those in highly competitive, fast-growth tech sectors. By basing the tax on turnover—revenue excluding value-added taxes and other indirect taxes—instead of profit, the EU further penalizes innovation and growth.

If CORE were to be implemented, American businesses are expected to be hit hardest, paying much of CORE’s €6.8 billion forecasted revenue. The minimum €100 million turnover requirement qualifies many American companies for the tax, either through their subsidiaries or their direct business on the continent. High-turnover, low-margin industries such as technology and pharmaceuticals—industries dominated by American companies such as Apple, Google, and others—will be heavily affected.

The anti-growth risks of the CORE proposal have not been lost on European leaders. German Chancellor Friedrich Merz, who previously criticized global minimum corporate taxes for overburdening European businesses, has now also opposed CORE, challenging the European Commission’s legal basis for levying such taxes.

Proposals such as CORE are a detriment to growth. The European Commission’s attempt to empower its taxation capacity comes at a time when European economies, such as Germany, continue to struggle in the aftermath of COVID and shocks to their energy supply. By raising the cost of doing business, CORE threatens European growth and unfairly burdens American companies operating in Europe.