France Releases A More Detailed Proposal For GAFA (Google, Apple, Facebook, Amazon) Tax

; posted on
March 5th, 2019

The French Minister of Economy on March 3 released more details on the proposed 3% digital tax, the so-called GAFA (Google, Apple, Facebook, and Amazon) tax on turnover. The bill is scheduled to be approved by the Cabinet on March 6 and then submitted to parliament.


In order to apply the GAFA tax, the company should satisfy two conditions laid out by the government in the proposal, which are the turnover test and activity test. Under the turnover test, the tax will only apply to groups with annual global revenue that exceeds EUR 750 million and where revenue in France exceeds EUR 25 million.

Meanwhile, under the activity test, the tax would only apply to enterprises engaged in one of the following activities:

  1. the operation of platforms which receive a commission for linking clients and businesses (but not for the sale of their own products);
  2. targeted advertising; or
  3. the sale of personal data for advertising purposes.

Referring to the turnover and activity test, it means that the GAFA tax will not only include Google, Amazon, Facebook, and Apple, but also is expected to affect 30 other companies. The French minister Le Maire confirmed that most of the companies are American, and include Uber, Airbnb, and Booking. Chinese, German, Spanish, and British companies would also be affected, as well as one French firm. Although the complete list has not released yet, the minister identified that the latter French company is Criteo, a company engaging in online advertising.

To the extent the company satisfies the test, any digital tax paid would be a deductible expense when calculating French corporate tax. The total number of groups targeted by the tax is estimated at 30 and the digital tax is estimated to raise a total of EUR 500 million.

Commencement Date

Once approved by the parliament, the tax will apply retroactively from January 1, 2019. The tax is meant to stay in place until the time comes when the international community agrees on new ground rules for the taxation of the digital economy.

Sources: Leparisien, Reuters

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