Public money for Palantir, pennies back in tax: EU procurement is failing Europe

Brussels

1 September 2026 13:15

Across Europe, public authorities spend trillions of euros every year buying goods and services – and the rules deciding who gets that money are now being rewritten.

Take Palantir.

In the EU, its software has been used by French intelligence, German police, Dutch defence bodies and the Spanish military. They now hold at least £670m [€782m] in UK government contracts, almost half from NHS contracts.

The US data analytics company is very interested in public money, but less interested in paying taxes.

They’ve recently established a Brussels office – one can only speculate on why.

Yet CICTAR (the Centre for International Corporate Tax Accountability and Research) calculated that on $1.66bn [€1.43bn] in pre-tax profit in 2025, Palantir’s global effective corporate tax rate was just 1.4 percent.

There’s a “tax gap” of at least €12m between what Palantir pays in Europe and what it would have paid without shifting profits to the US.

That contradiction should matter in Brussels right now.

The European Commission is preparing to overhaul the EU’s public procurement rules. They determine how public bodies buy everything from construction and cleaning services to hospital software, cloud storage and AI.

Public authorities spend around €2.6 trillion this way every year, roughly 15 percent of EU GDP. That is a massive economic lever. Used well, that purchasing power can support decent jobs, strong public services, fair taxation and strategic autonomy.

Used badly, it can reward the opposite.

Price is not the only measure of value

A leaked draft of the commission’s proposal on public procurement – expected next week (9 September) – contains welcome moves away from the obsession with choosing the cheapest bid.

The draft would make the “best price-quality ratio” the general approach.

But there is an escape route. Public buyers could set minimum quality requirements and then award a contract on price alone. That risks reproducing the problem with the current rules: social and environmental criteria exist, but too often remain optional while price dominates.

Quality should mean decent pay and conditions, safe staffing, respect for trade union rights and collective bargaining, and strong labour standards throughout supply chains. It should also mean reducing emissions, waste and resource use. Compliance with labour law is the bare minimum. Public procurement should be used to raise standards.

No public money for tax avoiders

The leaked draft falls short in the fight for tax justice, abandoning the existing possibility to address tax avoidance. While the leaked draft ensures that companies that have failed to pay taxes legally are excluded, it removes the current ground for public authorities to exclude companies that practice aggressive tax avoidance.

Palantir illustrates the problem well.

It depends heavily on public contracts, yet they structure their business so their tax bills are extremely low while remaining formally compliant with the law.

But legality is not the same as fairness.

Public money should not flow to companies that treat taxation as an obligation to be engineered away, and EU rules should reflect this.

Palantir is far from alone. CICTAR has examined tax-avoidance concerns involving major public contractors, including Amazon, Microsoft, Oracle and Accenture. For many large multinationals, minimising tax liabilities has become a routine part of doing business.

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Procurement rules need to address this. Large multinational bidders should provide tax transparency, including country-by-country information, and demonstrate responsible tax behaviour.

Why should a company receive huge public contracts while arranging its affairs so that little of its profit returns to the public purse?

Europe cannot outsource sovereignty

Procurement policy shouldn’t assume that a service must be outsourced.

The leaked proposal preserves possibilities for in-house provision and cooperation between public bodies without competitive tendering. That must be protected. Governments need the freedom to choose public provision when it offers better long-term value, accountability and resilience.

This is crucial for the exponentially growing field of digital services.

The leaked draft recognises risks from dependence on a limited number of non-EU suppliers, access to sensitive data, and foreign laws that can compel disclosure or interfere with contracts.

When hospitals, police forces or administrations depend on a handful of foreign cloud and AI companies, switching suppliers is not like changing a stationery provider.

If Europe is serious about digital sovereignty, it cannot rely on US tech giants for strategic services. The commission must strengthen the role of European public companies in delivering them and never undermine municipalities and public bodies providing services themselves.

Turning off Palantir?

France has decided to replace Palantir in its domestic intelligence service to reduce strategic digital dependencies; the Netherlands is moving towards a European alternative; Switzerland rejected Palantir over concerns that data could be accessed from the US.

EU procurement rules should help public authorities retain control of their systems and data, prevent public data being repurposed for private gain, require algorithmic transparency and involve workers and trade unions.

With this revision, the commission has a chance to turn €2.6 trillion of annual spending into a strategic tool.

That means moving beyond the lowest price, making social and environmental conditions real, demanding tax responsibility, protecting public provision and securing democratic control over Europe’s digital infrastructure. Public money should serve the public interest.