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First French Digital Tax Payment Due in October (1)

March 6, 2019, 1:10 PMUpdated: March 6, 2019, 4:46 PM

France’s proposed digital tax would hit tech companies as early as October, according to details announced by the French government March 6.

The 3 percent levy—dubbed the GAFA tax after Alphabet Inc.’s Google, Amazon Inc., Facebook Inc., and Apple Inc., which it targets—is on the digital turnover of companies with 750 million euros ($848 million) in worldwide revenue and 25 million euros of French digital sales. It would be effective from Jan. 1.

  • As proposed, the tax is due in April of each year, and is to be paid in two installments. In 2019, both installments will be due in late October, according to a March 6 government document obtained by Bloomberg Tax.
  • The French government will tax online marketplaces, the sale of data for targeted advertising, and the sale of targeted online advertising.
  • The tax is to be pro-rated based on the number of users companies have in France, but there is no information about how this would be calculated.
  • Activities that won’t be taxed are direct e-commerce retailing, messaging or payment apps, and online advertising that doesn’t involve user data.
  • Companies will be allowed to offset the tax against French corporation tax.
  • The government said the tax will be an interim measure applied until a global consensus on taxing the digital economy is reached.
  • The measure is expected to bring in 500 million euros annually.
(Updates with additional detail. Earlier version revised first sentence to describe tax as a proposal.)

To contact the reporter on this story: Hamza Ali in London at hali@bloombergtax.com

To contact the editors responsible for this story: Meg Shreve at mshreve@bloombergtax.com; Penny Sukhraj at psukhraj@bloombergtax.com