Earlier this summer, the French passed the Digital Services Tax bill which requires tech firms to pay 3% tax if they have a taxable turnover of €750 million on services worldwide and a €25 million turnover in France. The bill would only see the firms taxed 3% based on revenue generated in France but would make sure the country got its fair share from companies operating inside the country. In response, the U.S. decided to investigate the action and Trump threatened to hit back with tariff action.
The two parties have now come to an agreement to end the disagreement thanks to meetings at the G7 summit held in France over the weekend. French president, Emmanuel Macron, said that companies that pay the tax would be able to deduct the amount once a new international deal for taxing tech firms is agreed upon in the future – such a deal could be reached as soon as next year.
Talking to reporters, Macron said:
“We’ve done a lot of work on the bilateral basis, we have a deal to overcome the difficulties between us.”
France decided to implement its tax following a breakdown on the European Union level over how much to tax tech firms. The EU wanted to set a 3% sales tax on tech firms all across the bloc but Denmark, Ireland, and Sweden all said that they could not support the proposal in its current form. Since then, several countries including France, the U.K., and Italy have sought to introduce taxes on the national level.
Source: Reuters