By law n° 2019-759 dated July 24th 2019, France has introduced its Digital Services Tax (DST).

This tax is quite inspired by the proposition of Directive prepared by the EU Commission related to the common system of digital services tax applicable to the revenue gained from the supply of some digital services, still under negotiation between the EU Member States.

Objective of this “GAFA Tax”

The objective pursued by the French Ministry of Economy is to catch contributions of companies who get a significant part of their value from the participation of French located web users.

Are therefore taxed, at a 3% rate, the revenue gained from supply of advertising targetting for instance based on data collected from web users :

  • namely via search engines and social network,
  • and the supply of intermediation between web users, especially market places.

Those supplies of services will be taxed in proportion to the volume activity performed thanks to web users localized in France.

Ecommerce and supply of digital platform as such, for e.g. communication, finance or payment are not concerned. Only services with a large audience which generate important revenues are concerned.

Two cumulative tax liability threshold

  • 750 million Euro of digital services on a worlwide scale and;
  • 25 million Euro of digital services on a French scale.

Taxable Base

The 3% rate is applied to the multiplication of :

[the “French” turnover gained from said taxable digital services]

X

[“French turnover” / the worlwide one]

Payment and declarative modalities

These will vary depending onthe French VAT liability or not of the company. However, as soon as this company is established outside the EU, it is obliged to nominate a French fisal representative.

EUROTAX is at your disposal to assist you in your French DST obligations. Contact us for more information.