Palantir, which holds contracts with multiple European governments, has paid relatively little tax in Europe, according to a new report.

Researchers from the Centre for International Corporate Tax Accountability and Research (CICTAR), a non-profit organisation, and the European Public Service Union (EPSU), a trade union federation, found that Palantir reduced its tax liability in the region by shifting a portion of its revenues abroad.

Co-founded by Peter Thiel, the software company has drawn controversy for years over the surveillance capabilities of its technology, which critics contend raise privacy concerns.

The clients Palantir chooses to work with — including the military, law enforcement, and immigration services — have also fuelled this debate.

Palantir has secured significant success selling data analytics services to governments across Europe, most notably in the UK, France, Germany, Sweden, Spain, and Italy.

Securing major government contracts has boosted the company’s regional revenues. However, according to the CICTAR and EPSU report, Palantir employs tax strategies that facilitate what is known as base erosion, allowing the firm to lower the amount of tax it pays in Europe.

According to the report, the company achieves this by paying service fees to its US subsidiaries and introducing deductible expenses that diminish its taxable profits in Europe.

Consequently, while the effective tax rates applied to Palantir’s European operations appear high, the company manages to report low pre-tax profits.

Meanwhile, tax rates in the US remain significantly lower than those in Europe.

This practice extends to Palantir’s operations in the UK, which sits outside the EU.

None of the practices detailed in the report are illegal, and many large multinational corporations structure their operations in this manner to reduce their tax liabilities.

However, CICTAR and EPSU argue that base erosion is particularly problematic in Palantir’s case, emphasizing that while the company receives payments from governments for delivering services, it minimizes its contribution to the taxes that fund those very services.

Jan Willem Goudriaan, General Secretary of EPSU, said in a statement:

“Governments contract with Palantir to strengthen national security; but Palantir, by avoiding taxes, undermines public services, including national economic security.”

Although Palantir is deeply integrated into regional public service delivery, European alternatives such as France’s Chapsvision are gaining increasing traction.

Germany’s domestic intelligence agency announced that it will switch from Palantir to Chapsvision. In June, the French intelligence agency also announced that it would begin working with the domestic company.

Spain has asked other European governments not to criticise Morocco publicly over its role in the Ceuta migration crisis.

Madrid made the request during an online meeting of interior ministers yesterday (4 August), asking for negative messaging regarding Rabat to be prevented.

According to Euractiv, several participants at the meeting questioned how 72,000 people could enter the Spanish territory in North Africa in such a short space of time.

Spain’s appeal underlines the desire of the EU, which does not want to anger a key partner that will be of vital importance in managing future migration flows to Europe.

Rabat has also long been an ally of the EU on “counter-terrorism” and intelligence sharing.

Asked at a press conference on Tuesday who was responsible for triggering the crisis, Spanish Interior Minister Fernando Grande-Marlaska replied, “There does not necessarily have to be someone to blame.”

Except for an implicit reference by the Defence Minister, Spain avoided publicly criticising Rabat.

Von der Leyen proposes “more financial support for Morocco”

A Western government source told Euractiv that Morocco was believed to have at least tacitly approved the influx into Ceuta, and that the event was likely a political warning to Madrid.

Tensions were also fueled by false claims circulating on social media that the Spanish Supreme Court had issued a ruling prohibiting the forced “immediate” return of irregular migrants who reached Ceuta and Melilla by sea.

Shortly afterwards, Western officials also claimed that “actors in the Russian disinformation ecosystem” reacted “very quickly and on a large scale” to the events on the Spain-Morocco border.

German Chancellor Friedrich Merz explicitly called on Morocco to act and take back the migrants.

However, although other EU leaders, analysts, and media reports questioned how such a large-scale crossing could take place without at least a relaxation of normally strict border controls, they refrained from referring to the kingdom’s responsibility.

European Commission President Ursula von der Leyen reiterated the principle that migrants should not be used as tools to exert pressure on the EU, but she did not mention Morocco by name.

As the European Commission considers deepening ties between Brussels and Rabat, von der Leyen raised the proposal of offering more financial support to Morocco.

“Russian disinformation” warnings from the EU

Rather than blaming key partners, the European response shifted the focus largely to the role of human traffickers and the possibility that disinformation on social media may have amplified the criminals’ messaging.

This was also one of the main messages Rabat presented to the public. Interior Ministry spokesman Rachid Khalfi on Sunday blamed the “exploitation of the digital space” for creating the impression that entry into Europe via Ceuta was easy and carried no legal consequences.

Morocco also blamed the Spanish court ruling that sparked speculation, stating that Madrid should have foreseen these consequences.

EU Migration Commissioner Magnus Brunner said in a statement on Tuesday that Europol, the EU agency tasked with supporting national law enforcement agencies, was investigating potential disinformation cases linked to the crisis.

EU ambassadors and ministers discussed the role of disinformation in the crisis this week and reached a consensus on the need for better intelligence sharing.

According to sources, the European External Action Service has begun examining whether “Russian actors” attempted to exploit the incident on social media networks for political purposes.

EU border agency Frontex also aims to have its mandate expanded to include authority to monitor disinformation spreading on social media, as part of an upcoming review by the European Commission.

However, there is no clear independent research or investigation showing that a coordinated campaign was conducted before the events of last week.

Italy dials down the Schengen threat

On the other hand, Italy’s Interior Minister said on Tuesday that Spain should not “take personally” Italy’s move to tighten border controls.

Matteo Piantedosi told EU ministers during the online meeting held to address the short-lived Ceuta migration crisis, according to remarks shared with journalists, “This is in no way a measure directed at Spain or any other partner.”

Piantedosi sought to defuse tensions in a debate that had intensified since Rome led criticism against Spain last week over its management of the influx of approximately 60,000 Moroccans.

The government of Giorgia Meloni, backed by Denmark and 20 other countries, accused Madrid of creating a pull factor through its pro-migration policies and launched month-long checks on arrivals from Spain at sea and air borders.

The Italian minister stated that the measure was legal, argued that other countries also frequently implement their own temporary internal border controls, and presented Italy, particularly during the Lampedusa crisis in 2023, as a “historical victim of unbalanced load sharing in the EU” regarding migration.

The minister did not repeat the criticism Italy had directed at Spain in recent days. Instead, he used his speech to promote a strategy of offloading asylum applications to non-EU countries, including Albania.

Speaking at a press conference following the meeting, Spanish Interior Minister Fernando Grande-Marlaska said he hoped Italy would abandon temporary border controls.

The Spanish minister added that 70,000 of the 72,000 people who entered Ceuta have now returned to Morocco.

Criticism of Madrid softens

Several ministers, diplomats, and officials stated that a consensus was reached at the meeting to end the political tensions that had divided the EU over the past few days and to focus on technical work to strengthen the EU’s migration deterrence.

Two diplomats said no minister at the meeting demanded Spain’s suspension from the Schengen area.

Grande-Marlaska described the atmosphere of the meeting as constructive, noting that the countries that had directed the harshest criticism at Madrid last week had “reconsidered their views.”

The minister added that the risk of compromising the integrity of the Schengen area was never at issue.

Denmark, which had harshly criticized Spain over the Ceuta crisis, also sent a positive signal.

Minister for Integration Morten Bodskov stated in a post-meeting announcement that he was “very pleased that Spain acted quickly.”

Just as at Monday’s meeting of ambassadors, the speed of Spain’s return of migrants to Morocco drew widespread praise.

Reactions to Sanchez’s “legal migration” plan continue

Most EU governments remain firmly opposed to Pedro Sanchez’s controversial plan to legalise approximately 500,000 migrants living in Spain without the required documentation, arguing that it encouraged migrants to cross into Ceuta.

EU Migration Commissioner Magnus Brunner told reporters after the meeting that he understood Italy’s reaction, noting that citizens were concerned about the influx of migrants from Morocco.

Brunner said, “Looking at it from every angle, Europe has not had this much control over illegal migration in decades.”

Before the Ceuta crisis, the European Commission was already planning to present measures in September to strengthen the EU border agency Frontex, which was not deployed last week.

Ministers aligned around the action plan outlined in European Commission President Ursula von der Leyen’s letter sent to Pedro Sanchez on Monday.

Irish Minister for Justice and Migration Jim O’Callaghan, who chaired the videoconference, said, “There was a shared understanding of the need to relentlessly continue the fight against migrant smuggling networks, increase returns, strengthen EU borders, build deep partnerships with third countries, and improve foresight capabilities.”

Belgian Prime Minister Bart De Wever called for an urgent meeting of EU leaders to discuss the root causes of the events in Ceuta in an interview with Belga prior to the meeting.

However, two EU officials indicated that this was unlikely.

The EU will return to the matter at an informal meeting of interior ministers scheduled for October and at the next European Council meeting to be held in the same month.

European Union member states, led by Germany and France, are stepping up efforts to develop native alternatives to software from US data-analytics giant Palantir Technologies Inc., as concerns grow over deep-seated public sector reliance on the company’s platform.

According to a report by Politico, when German and French security officials unveiled plans last month to build a “European sovereign digital infrastructure,” technology and defense sector experts on both sides of the Atlantic widely viewed the initiative as a direct move against Palantir.

Across Europe, an increasing number of government officials are seeking substitutes for the Denver-based firm, which has embedded its software into some of the continent’s most sensitive operational domains, ranging from local policing and global intelligence to national defense and public health networks.

However, severing ties with Palantir to achieve greater digital autonomy presents severe operational hurdles. The company’s tools have become deeply integrated into everyday administrative workflows, backed by a level of data-processing expertise that few domestic competitors can match.

Philippe Latombe, a French advocate for digital sovereignty, compared the stickiness of Palantir’s platform to “sugar in Coca-Cola,” noting that the firm’s entrenched position makes disengagement exceptionally difficult.

“Palantir is capable of processing massive amounts of data with great precision, and thanks to its experience, it has had the opportunity to refine its algorithms and adapt them to various use cases with numerous clients,” Latombe said.

Despite these entanglements, efforts to break away from Palantir are gaining traction across the continent. In Madrid, the government of Prime Minister Pedro Sánchez has instructed state-backed companies to exclude Palantir from future public procurement contracts. In Paris, France’s domestic intelligence agency, the Direction générale de la sécurité intérieure (DGSI), opted for French firm ChapsVision over the US provider.

In the UK, the next major test of this policy shift is expected in February 2027, when the Labour government will face a decision on whether to terminate a £330 million contract with Palantir for the National Health Service (NHS) Federated Data Platform.

Rivals exploit European pushback

The decision by French and German intelligence structures last month to select ChapsVision dealt a dual setback to Palantir’s leadership.

Chief Executive Officer Alex Karp reacted sharply to the sudden turn away from his company’s products, while insisting he was unconcerned by European competitors.

“There is an example of what doesn’t work. Its name is Europe,” Karp said.

Olivier Dellenbach, CEO of ChapsVision, told Politico that his firm was benefiting from what he described as a “visceral rejection of Palantir” in parts of Europe.

However, Dellenbach emphasized that he did not want ChapsVision to be viewed merely as an “anti-Palantir” substitute, arguing that digital sovereignty will remain an empty slogan unless European governments back it up with industrial policy.

“We need more public procurement,” Dellenbach said.

Meanwhile, other European defense contractors are seeing increased interest in their proprietary platforms. According to Patrick Moreau, one of the architects of a data solution developed by French aerospace and defense group Thales SA, military authorities in Belgium, Germany, Luxembourg, Romania, the Netherlands, and Canada have expressed interest in the French Army’s Artemis AI system.

“They all want to be able to choose a sovereign solution compatible with NATO standards, as opposed to Palantir’s black box,” Moreau said.

Yet even officials advocating for domestic substitutes concede that the European market remains fragmented, with local vendors still lacking the scale and operational track record of their American counterpart.

Military entrenchment and political friction

The challenge of replacing Palantir is particularly acute in the defense sector. Admiral Pierre Vandier, NATO’s Supreme Allied Commander Transformation, told Politico in recent months that the alliance possesses no viable operational alternative to Palantir’s battlefield artificial intelligence technology.

A NATO official, speaking on condition of anonymity to discuss sensitive capabilities, said Palantir’s platform has unmatched capacity to process vast arrays of satellite imagery to identify targets, recommend strike weaponry, calculate required ammunition quantities, and automatically generate replenishment orders.

“To my knowledge, Palantir has no real competitor today,” Vandier said in May.

This deep integration has fueled sharp political pushback from critics concerned about the company’s leadership and ideological stance. Aurélien Saintoul, a French lawmaker who authored a parliamentary report on foreign military dependencies, criticized the influence of Palantir co-founder Peter Thiel.

“Peter Thiel explains that the defense of freedom does not necessarily require democracy. He clearly puts technical tools at the service of his own political project, and here we are talking about technofascists,” Saintoul told Politico.

A spokesperson for Palantir, speaking on condition of anonymity, dismissed such characterizations as “absurd,” noting that similar accusations had recently been leveled against the firm by the Russian Foreign Ministry.

Pointing to the company’s ongoing operational support for the Ukrainian armed forces, the spokesperson said: “We know which side we are on and who we stand with. Since our founding, the protection of privacy and civil liberties has been the foundation of how we conduct our work in both public and private sector institutions. Western politicians should think deeply about who the real enemy is and not become puppets of the Kremlin.”

Many of the company’s European critics maintain that the pushback is driven primarily by technological sovereignty rather than political ideology.

They argue that displacing Palantir from the continent’s security architecture is a necessary test case for broader technological independence. If European governments fail to replace a software provider, critics say, hopes of reducing reliance on US tech giants for underlying cloud infrastructure and hardware will prove unrealistic.

From crisis management to long-term contracts

Palantir established its presence in Europe long before the current boom in artificial intelligence, pursuing a growth strategy centered on deploying its software during national emergencies to demonstrate immediate value to governments.

In France, Palantir entered the market following the November 2015 terror attacks in Paris, as security services faced intense scrutiny over intelligence failures. The DGSI signed its initial contract with the data analytics firm in 2016.

A similar pattern unfolded in Germany, where Palantir’s first major deployment occurred in Frankfurt, the financial hub of the state of Hesse. In 2017, state police acquired Palantir’s Gotham platform, deploying it under the name hessenDATA as a core tool for connecting disparate data points in criminal investigations.

Germany remains deeply divided over the technology. Federal Interior Minister Alexander Dobrindt has pushed to expand Palantir’s footprint, introducing draft legislation intended to create a framework for broader federal use. However, the initiative has encountered resistance from coalition Social Democrats and senior security officials.

The same “crisis-to-contract” model was deployed in the UK during the Covid-19 pandemic. According to Louis Mosley, head of Palantir’s UK operations, the firm’s relationship with the NHS began during the health crisis, when it offered data aggregation services for a nominal fee of £1.

By contrast, Europol, the EU’s law enforcement agency, phased out Palantir’s Gotham platform after using it from 2016 to 2021.

A Europol official stated that the agency’s decision was driven by practical considerations rather than ideology, noting that the platform was expensive, raised sovereignty concerns, and left the institution reliant on Palantir for technical updates.

The official questioned whether every public body requires a platform as comprehensive as Palantir’s: “[Palantir] is really good when you have massive amounts of data and want to connect everything. But that is not the case for us. In most cases, alternatives are close enough. If we used it, I am not sure our efficiency would increase significantly.”

Expanding footprint across defense and corporate sectors

Part of Palantir’s operational strategy in Europe has involved recruiting former officials from target government departments. Investigative outlet OpenDemocracy reported that Palantir hired four former UK Ministry of Defence officials prior to securing a £240 million contract with the department.

The company is currently expanding its defense footprint across the region. On July 1, Palantir’s Maven Smart System—originally developed for the US Department of Defense—achieved full operational status within NATO, securing authorization to run on the alliance’s classified networks to link command and control systems.

“I think this is a very important turning point for European defense,” Mosley said.

Palantir’s reach extends beyond government agencies into major European commercial enterprises. In 2015, aircraft manufacturer Airbus SE integrated Palantir’s Foundry platform as the foundation of its aviation data infrastructure. Automaker BMW AG, energy giant BP PLC, and German media group Axel Springer SE also utilize Foundry to manage operational data.

Even if European entities succeed in reducing their reliance on Palantir, the company’s deployment model—which pairs software with embedded technical personnel—is being widely replicated by major US technology firms competing in artificial intelligence.

On June 30, Amazon Web Services announced a $1 billion investment to establish a “Forward Deployed Engineering” division designed to embed engineering teams directly within client organizations. Days later, Microsoft Corp. unveiled a $2.5 billion plan to deploy 6,000 engineers and domain experts to customer sites. Both initiatives mirror the operational model pioneered by Palantir.

Whether European institutions can transition away from Palantir is now viewed as a benchmark for the continent’s broader digital policy.

Hannah Neumann, a German Green Party member of the European Parliament’s Subcommittee on Security and Defence, emphasized the political stakes of the debate.

“European public institutions cannot become dependent on software developed by a small circle of US tech billionaires with an uncertain political worldview,” Neumann said. “That would be like outsourcing part of the democratic state to a private intelligence service that is accountable neither to voters nor to parliament.”