Digital Services Tax (Taxe sur les services numériques) – France

The Taxe sur les services numériques (TSN) is a French special tax of 3% on revenues from certain digital services provided in France. It was promulgated on 24 July 2019 by Law No. 2019-759 and applies retroactively from 1 January 2019.

• Tax rate: 3% on digitally generated revenue in France
• Thresholds: Global annual revenue ≥ EUR 750 million and French digital revenue ≥ EUR 25 million
• Covered services: Digital intermediation platforms (marketplaces) and targeted online advertising
• Tax authority: Direction Générale des Finances Publiques (DGFiP)

France was the first major industrialised country to introduce a standalone tax on digital services. The tax is commonly referred to as the "GAFA tax" in public discourse (after Google, Apple, Facebook, Amazon) and affects approximately 30 companies worldwide. Economy and Finance Minister Bruno Le Maire drove the legislative process after the EU Commission proposal COM(2018) 148 for a common digital tax failed to gain unanimous approval in the Council, prompting France to act unilaterally.

Following promulgation of the law on 24 July 2019, the US threatened 25% retaliatory tariffs on French goods (wine, cheese, handbags) under Section 301 of the US Trade Act. At the G7 summit in Biarritz in August 2019, France and the US agreed a truce: France suspended 2019 TSN payments pending a multilateral solution.

Although the OECD Inclusive Framework reached agreement on the Two-Pillar solution in October 2021, implementation of Pillar One has been delayed. France has therefore continued to levy the TSN regularly since 2021. In the context of Pillar One negotiations, the TSN remains one of the most-discussed examples of a unilateral digital tax.

The TSN covers two categories of digital services:

• Digital intermediation: Multi-sided platforms connecting users (e.g. Amazon Marketplace, Airbnb, Uber) — taxed on transaction revenue generated in France
• Targeted online advertising: Advertising personalised based on user data (e.g. Google Ads, Facebook Ads)

Excluded: Streaming, cloud computing, pure e-commerce sales (direct product sales without marketplace function), digital content provision services, regulated payment services and supervised trading platforms.

• Registration: Companies without an EU establishment must appoint a fiscal representative in France
• Tax base: The portion of worldwide digital revenues localised in France (apportioned by user location)
• Filing obligation: Annual tax return due by April of the following year
• Advance payments: Two advance payments per year — first instalment in June, second instalment in December
• Non-creditable: TSN is generally not creditable against other taxes
• Documentation: Evidence of revenue apportionment by geographical market
• Penalties: Non-filing or late payment may result in surcharges and late-payment interest under the general provisions of the Code général des impôts

1 correction:
- Promulgation date is 24 July 2019, not 11 July.
5 clarifications.
7 notes.