France has approved a 3 percent tax on the revenues of large technology companies: it won the Senate vote today, after approval in the House a week ago. The tax will affect digital companies with a turnover of over 750 million euros, of which at least 25 million generated in France, and will be applied retroactively from the beginning of 2019. The government estimates that this year it will raise 400 million euros.
The decision is a response to what the French government, but not limited to, considers ways to circumvent the tax authorities by large digital companies: these companies often pay most of their taxes in places where they do not have a strong stable presence but only in those in which they legally reside, chosen because they are fiscally more convenient, while offering their services everywhere. The result, according to the European Commission, is that an average traditional company pays 23 percent in taxes, while a large digital company pays between 8 and 9 percent.
France has long argued the need to levy taxes not only on the basis of the physical presence of a digital services company but also of the online one. The rule will mainly concern US companies – such as Facebook, Amazon, Microsoft and Alphabet, which controls Google – but also Chinese, German and Spanish. Donald Trump's US administration claims these measures are discriminatory and has opened an internal investigation to ascertain; the result could lead to the approval of duties and tariffs.
