The law creating a tax on digital services was adopted by the French Parliament on 11 July 11, 2019

Published on 12th Jul 2019

While discussions continue at an EU and an OECD level on a potential digital tax, France has pressed on and passed its own digital services tax.

The law aims to more precisely capture the benefit that companies derive from data coming from the active participation of internet users located in France, by introducing a tax on revenue from certain digital services.

The tax is intended to be temporary, until a solution is found at the OECD level, although the text itself does not include any formal indication in this sense. Indeed, France is actively working with all of its partners in the OECD to facilitate the development of an international solution to adapt the rules on corporation tax new challenges.

The largest companies or groups of companies that have a leading digital footprint at both global and national levels will be caught by the new tax. France will thus be one of the first countries to tax these companies in such a wide range of services and according to an original principle of territorial attachment.

Only large companies in the digital sector or companies belonging to large groups with significant digital activity at French and worldwide level are directly affected. According to the impact study of the bill, 30 or so corporate groups that may be subject to the tax have been identified. These groups French, European and non-European companies. Given the structure of the targeted markets, much of the expected return is concentrated on a small number of groups that capture the bulk of the value created.

Scope of application

The law provides that the taxable services are as follows:

Digital intermediation services

These services are the provision of a digital interface via electronic communications that allows users to interact with other users, including for delivery purposes of goods or the provision of services directly between those users.

Advertising targeting and resale of personal data for advertising purposes

These are services marketed to advertisers or their agents, enabling them to purchase advertising space on a digital interface accessible via electronic communications to place targeted advertising based on data from users who consult this interface. This includes, in particular: purchasing, storage and dissemination of advertising, advertising control and performance measurement services, as well as management and data transmission services relating to users.

Services whose primary purpose is not to connect users are not affected by the tax. Some services are therefore excluded from the scope of the new tax:

Intra-group services;

  • The direct sale of goods and services including digital content:
    • The direct supply of digital content (videos, audios, applications, software, games);
    • The provision of online data storage services;
  • Untargeted online advertising services;
  • Regulated financial activities;
  • Communication services or payment services;
  • The sale of data not collected by internet or sold for purposes other than advertising.


Only the reputed services provided in France will be taxable. Essentially, a service will be deemed to be provided in France if one of the users is located in France (for example, if they use an interface via a terminal located in France).

  • Digital interface intermediation services are considered to be provided in France when one of the users concluding an operation is located in France or, in the absence of an operation, when one of the users has an account that has been opened in France and allowing them to access these services.
  • Advertising targeting services are considered to be provided in France when the digital interface displaying targeted advertising is viewed from France. As regards the sale of data for advertising purposes, it is considered to have been supplied in France when this data was generated by a user from France.

The portion of these services provided in France subject to tax is obtained by applying to the amount of sums received a coefficient representative of users located in France in relation to the total number of users.

Calculation procedure

The rate of the new tax is 3%.

The law provides for two thresholds: only companies whose turnover (at the level of the consolidated group and worldwide) exceeds 750 million euros for this type of services are included in the scope application of the tax. However, companies that provide less than 25 million euros of taxable services in France are excluded.

The law also provides that the tax is based on the amount, excluding value-added tax, of the sums received in exchange for the supply of taxable services in France; these sums consist in particular of the commissions and subscriptions received by the intermediation platforms from their users or the revenues collected from advertisers for advertising services. In addition, the taxable base is independent of the mode of payment of the service.

The performance of the digital service tax should be as follows:

2019 2020 2021 2022
400M€ 450M€ 550M€ 650M€


Lastly, the law provides for reporting, collection and control procedures that are based on those applicable to turnover taxes. Consolidated companies belonging to a group will have the option of opting for a declarative and centralised payment system at the level of a single taxable company.

The French Tax Administration will be able to ask a taxpayer for clarification and, if necessary, to put them on notice to produce the requested items. If there is no response, or an insufficient response, the administration will be able to automatically establish the tax.

The impact on consumers

An impact of the cost of the tax on consumers is probable. Nevertheless, it will be different depending on the service that will be provided. According to an economic impact assessment by Taj Deloitte, for digital intermediation services, the likely impact will be as follows:

  • Sale of goods: the consumer would ultimately bear 45% of the cost of the tax;
  • Supplies of services: the consumer would ultimately bear 54% of the cost of the tax;
  • Advertising targeting and resale of personal data for advertising purposes: the consumer would bear 77% of the cost of the tax

The introduction of the tax will therefore have an indirect impact on consumer prices.

This tax will be applicable as from 1 January 2019, and an instalment should be paid as of October 2019, based on 2018 revenues.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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