Share with your friends

France: Draft proposal for digital services tax

France: Draft proposal for digital services tax

The French government today released a draft law that proposes to introduce a digital services tax.


Related content

Digital services tax


The French Finance Minister, Bruno Le Maire, announced a decision to accelerate the adoption of a domestic digital services tax given:

  • A desire to achieve international “tax fairness”
  • The approaching European elections in late May 2019
  • An expectation that there will not be a consensus reached on 12 March 2019, by the EU Member States with respect to a new draft EU Directive on Digital Advertising Tax (DAT), despite a substantial reduction of the scope of the new draft directive when compared to the initial directive as proposed in March 2018 (the new directive proposed on 1 March 2019 by the president of the EU Council effectively only concerns income from the supply of digital advertising services)

In early February 2019, a first draft of French domestic digital services tax legislation was presented to a French administrative high court for a technical opinion. The initial draft legislation proposed a retroactive effective date of 1 January 2019 but was silent on the rate of the digital services tax (Finance Minister Le Maire had announced a progressive rate up to 5%). There were other uncertainties concerning the scope of a digital services tax.

The content of the draft legislation proposed by the French government on 6 March 2019 is discussed below.

Scope of French digital services tax

Companies subject to the digital services tax would be those with digital revenue of more than €750 million worldwide and more than €25 million in France. This provision is expected to allow start-up companies to be exempt from the tax, and only very large companies would be subject to the tax. Approximately 30 multinational taxpayer groups would be expected to be subject to the tax (including a French group listed on the Nasdaq).

Material scope of application

Under the proposed digital services tax, taxable services could be separated into three categories:

  • The provision of a digital interface to enable users of platforms to interact with each other in order to exchange goods or services. In a press conference on 6 March 2019, Finance Minister Le Maire stated that only platforms remunerated by a commission fee to enable interactions between users would be targeted (still, this would need to be confirmed in the discussion of the draft law in parliament).
  • Advertising conducted on digital interfaces. The targeted services would correspond to services for the purchase, storage, and distribution of advertising, advertising control, and performance measurement, as well as services for the management and transmission of user data.
  • The resale and management of personal data for advertising purposes.

In contrast, companies selling goods on their website or providing content on a platform—as well as communication and payment services—would be exempt from the digital services tax. Similarly, regulated financial services and services provided between companies of the same taxpayer group would be excluded from the scope of the digital services tax.

Territorial scope of application

  • The provision of a digital interface would be subject to the French digital services tax if the user concluding the transaction is located in France or if the interface account is opened from France.
  • For services marketed on the interface, taxation would occur if the advertising is consulted in France by the user or when the user whose data is sold consults the interface in France.

The burden of proof for determining the location of the user or the place where the account on the interface is opened would rest with the taxpayer. 

Rate and deduction

Although the French government was initially considering a progressive rate for the digital services tax, the draft legislation mentions a flat tax of 3% of the taxable income. 

As the digital services tax would be due for each calendar year during which a taxable activity is performed, its final approval and passage by the French parliament before 31 December 2019 would effectively result in a retroactive effective date of 1 January 2019.

The amount of tax paid would be deductible from the accounting result of the taxpayer (hence the corporate income tax basis).


The digital services tax would follow the system established for the value added tax (VAT) with respect to the declaration, recovery or litigation. A yearly declaration would be filed in April of the following calendar year. Two installments of the tax would be due in April and October, the total of which would need to correspond to the amount of the digital services tax that was due for the prior calendar year. The payment of any balance would be due upon the filing of the yearly declaration in April.

For 2019, a “super installment” payment of the tax would be due in October and would correspond to the theoretical digital services tax based on 2018 figures. 

What’s next?

The discussion and legislative process of the digital services tax in the French Parliament is expected to start in April 2019. Compatibility of the digital services tax with France’s network of income tax treaties, with EU law, and possibly with the French Constitution may be addressed during this legislative process—in particular, there would have to be attention paid to the possible double application of two national digital service tax regimes on the same income flow.

At the international level and following the interim report published in March 2018, OECD members agreed to review the impact of digitalization on nexus and profit allocation rules. They committed to continue working together towards a final report in 2020. For this purpose, a public consultation meeting will be held on 13 and 14 March 2019 in Paris. The aim is to provide external stakeholders with an opportunity to provide input at the beginning of the process and to benefit from it. On this point, Finance Minister Le Maire confirmed that the French digital services tax would apply until international tax rules are adapted to take into account the digital presence for the purposes of profit taxation. The practicalities of the follow-up to this announcement are unclear.


For more information, contact a tax professional with a KPMG member firm in France (KPMG Avocats):

Patrick Seroin | + 33 (0) 1 55 68 48 02 |

Laurent Chetcuti | + 33 (0) 1 55 68 48 87 |

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal