Google could face fines of up to $1.3bn under EU's new 'right to be forgotten' regime

EU to ratchet-up fines over 'right to be forgotten' with penalties of up to two per cent of turnover

New rules over the European Union's so-called "right to be forgotten" could see internet companies like Google fined as much as $1.3bn.

The stiff fines are part of a new regime that, according to Reuters, was agreed by EU ambassadors last night.

The proposals include three levels of fines of between 0.5 per cent and two per cent of an organisation's annual, worldwide turnover as a penalty for failing to adhere to people's right, under EU rules, to demand that search engines and social media websites de-link and remove material on request.

The proposal is a draft put together by Latvia, which currently holds the EU's six-monthly rotating presidency, and could be endorsed by EU ministers in mid-June. While the fine seems steep, it represents a compromise compared to the demands of the European Parliament, which called for fines of up to five per cent of turnover - or $3bn in terms of Google's annual revenues.

Google has been a particular target of EU regulators following the EU Supreme Court ruling that it must remove outdated or irrelevant links from search results. The US internet giant has argued that the EU can only insist that such cuts are made on localised domains in the European Union, such as google.co.uk or google.de.

However, the EU Supreme Court has been demanding that it makes such changes across all of its websites, including the US google.com website.

According to Reuters, the proposals are part of a wider plan to update the EU's privacy laws "in a bid to make them more harmonised and relevant for the rise of the internet".

They also come in a month that the EU sought to put together a package of measures to create a "digital single market" in Europe, measures debated in the European Parliament on Tuesday, in a bid to spur growth in the internet economy.

Those measures came just months after the EU changed VAT laws to force companies trading across Europe to pay the tax in the countries that their customers reside in, forcing even sole traders and small companies to register for, and pay, VAT in the 27 countries of the EU if they want to export even small quantities of goods to them.