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Free Trade works when there is a level playing field.

In Europe a company can base itself where there are the lowest taxes, and is not further taxed by selling to other european countries (a flaw in the single market).

The same flaw applies when there are free trade agreements that cross to other countries that do not account for the tax regimes properly.

Now with physical goods you (normally) apply import tarrifs/custom charges at the border to account for the differences in tax regimes, and allow domestic players to compete fairly with international players that have lower costs.

Surely the way to fix this is to apply an "import tax" to digital goods sold by non-domestic companies (regardless of the domain name they put in their website, with this tax variable depending upon the tax regime of the parent company's country) If they choose to base a company domestically that's fine, but profits can only be shifted overseas by paying a profit transfer tax equivalent to corporation tax. Obviously any purchases the domestic company makes from the parent need to be taxed at the import tax too to prevent avoidance of this tax. (Eg "Brand licensing", "loan interest", "coffee beans")

So the likes of google have the choice

1) Have a UK subsidiary. Pay only domestic taxes, but ANYTHING they transfer to the parent company is taxed.

2) Be based internationally. An import tax applies to all sales, digital or not. This tax should level the playing field.

Fixing low tax bases within the European single market is a separate issue. Really its a flaw in the whole single market concept, so unless you force corporation tax to be normalised you'll need some sort of compensation tax paid to every other country in the single market that you do business (presumably based on the percentage of business done in that country * the corporation tax difference in that country)

OK realise thats not all that simple, but surely cleverer economic minds than mine can sort something!