France’s tax on digital services, criticized by Silicon Valley and U.S. President Donald Trump, won the backing of the nation’s constitutional judges.
The Conseil constitutionnel dismissed claims that the 3% French levy, expected to bring in €774 million ($909 million) in revenues in 2025, violates the principle of equality before the law. During a hearing in August it had been contested by lawyers for Airbnb Inc. and Digital Classifieds France.
Trump has long argued that digital services taxes are discriminatory against the likes of Amazon.com Inc. and Meta Platforms Inc. He’s warned he would impose “substantial” tariffs on countries that imposed such levies, rules or regulations that hit American companies. France was one of the first countries to set a digital tax and the European Union is discussing options to levy such firms where they do business.
The French tax, first introduced in 2019, is levied on company revenue in the nation from targeted advertising, sale of personal data, and intermediary services. Companies in scope of the law are those with €750 million in global revenue and at least €25 million of revenue in France.
A large part of France’s budget difficulties in the last 18 months stem from disappointing tax receipts, making it crucial for the treasury to preserve all revenue streams.
France now has the euro area’s largest budget deficit but no consensus exists on the way forward. After the second government collapse in less than a year earlier this week, the new prime minister, Sebastien Lecornu, is facing mass protests over budget policy as he tries to build parliamentary support for cuts.
