The Digital Service Tax (DST) was approved by the French Senate on 11 July 2019 (1), which will tax big technological companies. As previously mention in one of our posts the tax is aimed to large corporations in the digital sector whose taxable turnover exceed EUR 750 million for services provided worldwide for which EUR 25 million are provided in France (2).

The French government has argued that such firms headquartered outside the country pay little or no tax (3). In accordance with this position, the European Commission estimates that on average traditional businesses face a 23% tax rate on their profits within the EU, while digital companies typically pay 9.5% (4).

The DST, also known as “GAFA tax”, meaning that it is aimed to companies such as Google, Apple, Facebook and Amazon, will levy a 3% tax on revenue from digital services including the provision of digital platforms for selling goods and services, advertising placed in digital interfaces and the sale of data for advertising purposes (5).

The Digital Service Tax base will include all revenues (excluding VAT) over services deemed to be made or supplied in France. The portion of the revenues attributable to France is carved out from worldwide digital revenues by applying a percentage representing the share of the services attached to French-based users(6).

The approved measure will be applied retroactively from January 2019 and it expected to raise about EUR 400 million this year (7).