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Tax on digital services in France


published on June 27, 2019 | reading time approx. 3 minutes


As a result of the failure to introduce a tax on digital services at the European level, the French Government submitted to the Parliament a draft law to tax digital services in France (“GAFA” tax).


If adopted, the Law will come into force retroactively to January 1, 2019.





Services subject to the “GAFA” tax

Three types of services are subject to the future "GAFA" tax:
  • The so-called "intermediation" services whose purpose is to bring users into contact, whether professional or private (for example: market place, dating site, etc....)
  • Services known as “advertising placement on a digital interface” whose purpose is the targeted advertising by customizing ads according to the profile of the interface's users
  • The sale of personal data of users located in France

Services expressly excluded from the “GAFA” tax

The future tax on digital services provides for many exclusions, including:
  • Interfaces whose main purpose is to provide video or music on demand
  • Regulated payment interfaces
  • The direct online sale of goods or services by a company
  • Advertising placements as long as they are not targeted according to the profiles of the interface users.

Services provided between companies of the same group will not be subject to the "GAFA" tax.

Tax liability

The “GAFA” tax only applies to very large digital companies. In practice, only about twenty companies may be impacted by the scheme.


Only companies exceeding the thresholds of 750 million euros of worldwide turnover and 25 million euros of turnover in France (cumulative conditions) for services covered by the “GAFA” tax, will be liable for this tax. The place of establishment of the service provider is irrelevant.


In company groups, these thresholds will be assessed at group level.


The “GAFA” tax should amount to 3 per cent of the turnover generated in France for the services taxed.


Compatibility of the “GAFA” tax with International and European Union law

Should the “GAFA” tax fall within the scope of international tax agreements (as a tax assimilated to corporate income tax), the criteria provided for in the agreement should be observed and in particular the requirement for a foreign company to have a permanent establishment in France in order to justify taxation in France. At present, however, the draft Law provides that the place of establishment of the service provider is irrelevant for the applicability of the tax.

Since the future “Gafa” tax should mainly impact foreign companies not established in France, this tax could also be questionable as it would constitute a hidden discrimination contrary to European Union law. 

The draft law is currently being discussed.




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