French Digital Tax Will Affect 30 Major Companies
Currently, companies such as Google, Facebook, Amazon and Co. pay practically no taxes within the European Union (EU) due to still legal tax savings models and the transfer of their profits to tax havens. France already announced at the end of 2018 that it would introduce a so-called digital tax, which would ensure that the current taxation could be significantly increased. This initiative is controversial within the EU; a proposal submitted by France and Germany in December has so far failed to achieve a majority.
The proposal submitted in 2018 stipulated that online companies would have to pay VAT of three percent on their advertising revenues. The EU-wide tax was to be introduced from 2021. Since US companies would be particularly affected by the introduction of the digital tax, the German government was much more cautious in the discussions taking place in 2018 than the representatives from France, since higher import duties for German cars into the USA were feared as retaliatory measures.
According to a report in the newspaper Le Parisien (Sunday) France now seems to be going it alone because of the disagreement within the EU. The digital tax applicable only to France would affect some 30 groups with an annual turnover in online services of more than EUR 750 million worldwide and an annual turnover in France of more than EUR 25 million. In addition to the sizes from the USA, this would also affect companies from Germany, Spain, Great Britain and China as well as a French company.
The French digital tax will be introduced if the EU does not create a uniform regulation by March. The tax would be levied retroactively from 1 January 2019. Estimates assume revenues of around 500 million euros.