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France Investigating Digital Economy Taxation

Ulrika Lomas, Tax-News.com, Brussels

10 March 2015


French authorities have provided an update on progress towards the development of new methods to tax large internet-based multinationals.

A report issued by France Strategie, a government agency responsible for advising the Government on fiscal policy, suggested that France should continue to persist with proposals to tax the value derived from certain intangibles specific to the digital economy, such as the value derived from personal data.

The report notes that digital economy businesses often escape taxation as their business models are substantially different than those of traditional businesses. It suggests that these companies should be subject to a specific tax regime, despite the Organisation for Economic Co-operation and Development concluding, in its report on the tax challenges of the digital economy, that the digital economy cannot be ring-fenced for tax purposes.

Previously, a number of European Union member states have attempted to introduce a tax on internet advertising or news syndication services. In France, the former was widely opposed, since it was said to hit traditional business most heavily.

The French agency is seeking to put forward proposals to tax the value derived from data. The report authors recognize, however, that the idea of a tax on data throws up its own issues, including potentially distorting business decisions and slowing innovation. France intends to continue its review of possible mechanisms.

TAGS: tax | business | fiscal policy | commerce | internet | e-commerce | multinationals | transfer pricing | France | tax reform | European Union (EU) | services | Europe

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