French government proposes digital tax and delay in corporate tax rate reduction

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March 2019

Overview

The French government on March 6 launched the legislative process to introduce a tax on digital sales realized by large internet and technology companies and to partially postpone the corporate income tax rate reduction initially intended to apply as of January 1, 2019.  

The proposed 3% digital tax would apply to companies providing certain digital services in France with global annual revenue in excess of EUR 750M and revenue in France exceeding EUR 25M.  The proposed tax would apply to digital gross sales realized as of January 1, 2019.

The draft bill also includes a provision postponing the decrease of the corporate income tax rate from 33-1/3% to 31% for companies or tax groups with global revenue in excess of EUR 250M.

The takeaway

The proposed draft may be amended in the coming weeks following French Parliament debates. 

Technology and internet companies operating in France should start considering the impact of these proposed measures, as well as additional reporting and filing requirements resulting from the proposed digital tax.

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