Digital Services Tax introduced

FRANCE - Digital Services Tax introduced

September 2019

A French Digital Services Tax (DST) has been definitively adopted by the French parliament, and will apply retroactively from 1 January 2019.

Context and objectives

The introduction of the “GAFA” tax was announced by Bruno Le Maire, Minister of The Economy and Finance on 6 December 2018.  

On 24 July 2019, President Macron signed the legislation creating the GAFA tax on digital services, largely inspired by the EU Directive for which no consensus was found.  

The DST should be temporary, while waiting for a long-term and coordinated solution by OECD members. Multilateral negotiations are progressing and an agreement could be reached by 2020.  

Scope of the tax  

The following services are subject to the DST:

  • The supply, by electronic means, of a digital interface that allows users to contact and interact with other users, including for the delivery of goods or services directly between those users”.
  • Services provided to advertisers or their agents enabling them to purchase advertising space located on a digital interface accessible by electronic means in order to display targeted advertisements to users located in France, based on data provided by such users.

    These services include, among others, the buying, stocking and diffusion of advertising messages and the management and communication of users’ data.

The Law excludes from the scope the following services:

  • Direct sale of goods or services online;
  • Making a digital interface available as a primary means to provide users with digital content, communication services and payment services;

Based on the text, the tax should not be targeted at providers of streaming video services or on-demand music services, as well as mail or payment service, when they are paid-for services.

  • Regulated financial services expressly listed in the Law;  
  • Services provided between companies belonging to the same group.  

Territorial scope

The taxable services are deemed to be made or supplied in France when:   

  • One of the users concluding a sale or supply of services is located in France or, in the absence of a sale/supply of services, when one of the users has an account that has been opened from France to access these services;
  • The data was obtained from the consultation of digital interfaces by users located in France, or when the advertising message was placed on a digital interface consulted by a user located in France.

A user of a digital interface is located in France if he/she visits that interface through a terminal located in France. The latest version of the Law specifies that location in France is determined by any means, including the IP (internet Protocol) address.


Taxpayers are defined as French and foreign companies for which the annual sums received in consideration for taxable services cumulatively exceed both of the following thresholds:  

  • EUR 750 million of worldwide revenue;
  • EUR 25 million generated in France.

Thresholds are assessed at group level for groups for which the obligation to file consolidated financial statements applies (companies linked by a control relationship as defined by II of Article L.233-16 of the French Business Code).

Tax basis

The tax base includes all worldwide revenues (i.e. gross revenues) received by the taxpayer (excluding Value Added Tax) for taxable services, multiplied by a percentage representing the proportion of taxable services to be made or supplied in France.


The tax rate is fixed at 3%.

Filing and payment

The tax will have to be declared in the annex of the CA3 French VAT return:  

  • For companies liable to pay VAT on a monthly basis - simultaneously with the March VAT return (CA3), or the first quarter of the year following the one in which the tax became payable;
  • For companies not liable to pay VAT in France - at the latest on 25 April of the year following the one during which the tax became payable.

From 2020, taxpayers subject to the normal VAT regime will also have to pay the tax in two instalments; the sum must be at least equal to the amount due for the previous financial year.

In accordance with the calendar defined for 2019, the tax due for 2019 will be the subject of a single deposit payable in November 2019 on the basis of the 2018 revenue derived from in-scope activities.

The text also provides for:

  • An obligation for DST taxpayers to keep, in support of their accounting:  
    • Information on the amounts collected monthly in consideration for each of the taxable services provided, by distinguishing between those relating to a service provided in France and abroad and, where applicable, those excluded from the basis;
    • The monthly quantitative elements used to calculate the percentages representing the share of taxable services connected with France.
  • The implementation of a specific procedure allowing the French tax authorities to request from entities liable to DST a justification of all the elements used as a basis for calculating this tax, without constituting a tax audit.

Deductibility of the tax

The tax would be deductible for corporate income tax purposes in France.  

Sacha Boksenbaum