Finance Committee considers hiking Digital Services Tax from 3% to 5%
France’s Finance Committee of the National Assembly is reviewing an amendment (I-735) to the 2025 budget to raise the 3% Digital Services Tax (DST) to up to 5% to raise €500m. A separate proposal (I-507) to hike it to 6% was rejected on 19 October 2024. I-735 is due to be revisited early next week for potential inclusion in the budget.
The proposed amendment will be considered by Parliament on 21 October 2024.
This comes as global OECD Pillar 1 negotiations to realign taxation rights of cross-border digital services falters. France is in dire need to bring down its state budget deficit which may hit 6% for 2024 – 3% above the EU limit.
Most countries with DST’s had agreed a moratorium on changes until the OECD had completed the Pillar 1 reforms to avoid the US retaliating with trade sanctions.
Italy is reviewing withdrawing its DST thresholds to raise additional funding as it too is frustrated by slow progress on the OECD discussions.
As with countries like Italy, Spain and the UK, France introduced a controversial DST on revenues from online advertising, user data exchange and digital intermediation between online sellers and buyers.
Controversial levy hits mainly US digital giants
France’s DST is a levy introduced in 2019 targeting large multinational technology companies. The tax applies to firms that generate substantial revenue from digital services, particularly those involved in online advertising, data transmission, and digital marketplaces. It affects companies with global annual revenues of at least €750 million, of which at least €25 million is derived from activities in France.
The tax was introduced as a response to the perception that tech giants like Google, Amazon, and Facebook were not paying their fair share of taxes in countries where they generate significant income. France’s DST is set at 3% of revenue generated from certain digital services within its borders.
The tax has sparked controversy, particularly from the United States, as it disproportionately affects U.S.-based tech firms. This led to trade tensions, with the U.S. threatening tariffs on French goods in retaliation. Despite these conflicts, France maintains that the DST is a temporary measure, intended to bridge the gap until a more comprehensive international agreement on taxing digital giants is reached, likely through the OECD’s broader efforts for global tax reform. The DST has influenced similar proposals in other European countries and discussions at the EU level.
Europe Digital Services Taxes (DST)
| Country | Status | Rate | Annual sales threshold | Scope | |
| In-country income | Global income | ||||
| EU Digital Levy | Paused | 3% | EU €50m | €750m | Marketplaces; advertising |
| Austria | Jan 2020 | 5% | €25m | €750m | Advertising |
| Belgium | Paused | 3% | €5m | €750m | Advertising; Intermediation; Data Transmission |
| Czech | Proposed | 5% | CZK 100m | €750m | Advertising; digital services |
| Denmark | Jan 2024 | 2% | Streaming video | ||
| France | Jan 2019 | 3% | €25m | €750m | Digital interface; advertising; user data |
| Greece | Jul 2019 | Nil | n/a | Tourist accomodation | |
| Hungary | Jul 2019 | 0% to Dec 2022; then 7.5% | HUF 100m | n/a | Media content; Advertising |
| Italy | Jan 2020 | 3% | €5.5m | €750m | Advertising; digital interfaces; user data |
| Latvia | Paused | 3% | €750m | Digital interface; advertising; user data | |
| Norway | Paused | Subject to progress on OECD plans | |||
| Poland | Jul 2020 | 1.5% | Streaming media and Audiovisual media service and audiovisual commercial communication | ||
| Poland 2 | Proposed | 7% | Digital services | ||
| Portugal | Feb 2021 | 1.5% | Video-sharing platforms and subscription TV streaming (1%) | ||
| Portugal 2 | Proposed | 7% | Streaming video services | ||
| Slovenia | Proposed | Advertising; user data | |||
| Spain | Jan 2021 | 3% | €3m | €750m | Advertising; user data |
| Turkey | Mar 2020 | 7.5% | TRY 20m | €750m | Advertising; Content; social media |
| UK | Apr 2020 | 2% | UK £25m | £500m | Marketplaces; Social media; search engines |
