The France digital services tax is a 3% levy on gross revenue that large technology companies earn from certain digital activities linked to French users. It has been in force since January 1, 2019, and it applies to any corporate group whose worldwide revenue from covered digital services topped €750 million in the prior calendar year and whose French-linked revenue from those same services exceeded €25 million over the same period. France still collects it while OECD negotiations over a broader international solution remain unfinished.
Who Has to Pay
Article 299 of the French General Tax Code sets a two-part revenue test. A company first checks whether its total worldwide revenue from taxable digital services crossed €750 million in the previous calendar year. If that threshold is met, it then checks whether the portion attributable to France exceeded €25 million over the same period. Both conditions must be true before any tax is owed.1Service public. French General Tax Code – Tax on Certain Services Provided by Large Companies in the Digital Sector
The thresholds are measured at the corporate group level. Every company linked by a control relationship has its taxable revenue combined for the threshold test, and the control relationship is assessed as of December 31 of the year in which the taxable services were provided. That prevents a large group from splitting operations across subsidiaries to slip under the numbers.
A physical office in France is irrelevant. A company with no employees, servers, or registered office in the country still owes the tax if its digital revenue clears both marks. Around 30 companies fall within scope, most of them American, though Chinese, German, British, Spanish, and French firms are also affected. The tax generated roughly $3.1 billion for the French treasury between 2020 and 2024.
What Activities Are Taxed
The 3% rate applies to gross revenue from three categories of digital activity.2Office of the United States Trade Representative. Report on France’s Digital Services Tax
The first is digital intermediation: operating a platform that connects users with each other and lets them transact. A marketplace where buyers meet sellers, or a ride-hailing app that matches drivers with passengers, sits here. The point is that the platform facilitates deals between third parties rather than selling its own goods.
The second is targeted advertising: placing ads on a digital interface when those ads are selected or tailored using data collected about the user viewing them. This covers both the sale of ad space and the algorithmic targeting that makes it valuable.
The third is the sale of user data: revenue from transmitting data that was gathered specifically from how users engaged with a digital interface.
Each category is assessed on its own. A company running both a marketplace and an ad business calculates a separate taxable amount for each.
What Falls Outside the Tax
Several digital activities are not covered even when they produce substantial French revenue. Platforms whose primary purpose is delivering digital content, such as music streaming, video services, or online games, are outside the scope. Messaging and email services are also exempt, provided they do not function as marketplaces facilitating sales between users.
Regulated financial services, including banking and payment processing platforms, are carved out. So are services a company runs purely for its own internal use rather than as a platform open to outside users. Revenue from goods or services that are economically independent from the platform itself also comes out of the taxable base.
How French Revenue Is Calculated
The mechanic that ties worldwide revenue to France is a “presence coefficient,” a ratio calculated over the full tax year that varies by service type.1Service public. French General Tax Code – Tax on Certain Services Provided by Large Companies in the Digital Sector
- For marketplace intermediation, the ratio equals the share of transactions completed during the year where at least one party was located in France.
- For non-marketplace intermediation, it is the proportion of users holding an account opened from France who actually used the service during the year.
- For targeted advertising, it is the share of ad impressions served to users located in France.
- For data sales, it is the share of users whose sold data was generated or collected from France.
A user counts as located in France when they access the interface from a device physically present in French territory. Companies can rely on IP addresses, account registration data, or any other reliable method, subject to French data protection rules. The coefficient is always annual; monthly snapshots are not accepted.
Once set, the coefficient is multiplied against worldwide revenue from that specific service to produce the French taxable base. The 3% rate then applies. A company with multiple taxable activities runs these calculations in parallel.
Filing and Payment
Companies within scope make two advance installments each year. The first is due in March, filed alongside the final balance payment for the prior year. The second is due in September. Both are reported through the monthly CA3 VAT return (Form No. 3310-CA3) or its dedicated annex on the French tax portal at impots.gouv.fr.3Direction générale des Finances publiques (impots.gouv.fr). Declare and Pay VAT
The process is entirely electronic. Paper filings are not accepted. Returns must break revenue down by service category and document the presence coefficient calculations in enough detail to survive an audit. Companies should hold granular records of user location data, transaction counts, and ad impressions, because the French tax authority can request this material during a review.
If the authority finds discrepancies between reported figures and internal data, it can issue reassessments carrying back taxes, interest, and administrative penalties. Standard French tax penalty rules apply, so late filings and underpayments trigger interest from the original due date.
How It Interacts With U.S. Taxes
American companies paying the French DST cannot claim it as a foreign tax credit on their U.S. return under IRC Section 901. That credit requires a tax based on net income, and the DST is calculated on gross revenue with no deductions allowed. The DST therefore functions as a pure cost rather than an offset against U.S. tax liability.
Whether it qualifies as a deductible business expense under Section 164 is a separate question that companies should work through with their tax advisors. The practical effect for most affected U.S. firms is that the DST raises their total global tax burden rather than shifting it between jurisdictions.
Trade Friction and the OECD Transition
France has always described the DST as temporary, meant to bridge the gap until the OECD’s Inclusive Framework delivers a multilateral solution. The law itself contains no sunset clause or automatic expiration date.4Tax Foundation. FAQ on Digital Services Taxes and the OECD’s BEPS Project
In October 2021, the United States and several European countries, including France, signed a joint statement committing to withdraw their DSTs once the OECD’s Pillar One framework takes effect. That political compromise was extended through June 30, 2024.5U.S. Department of the Treasury. The United States, Austria, France, Italy, Spain, and the United Kingdom Announce Extension of Agreement on the Transition from Existing Digital Services Taxes to New Multilateral Solution The OECD’s Multilateral Convention to implement Pillar One (Amount A) is still not open for signature as of early 2026, and several issues remain unresolved among member jurisdictions.6OECD. Multilateral Convention to Implement Amount A of Pillar One
The United States has pushed back hard against unilateral digital taxes. The Trump administration threatened 100% tariffs on certain French imports when the DST was first enacted in 2019, later reduced to a threatened 25% that was suspended to let OECD talks proceed. A renewed Section 301 investigation into the DSTs of France and other countries opened in 2025.
France’s own legislature has debated expanding the tax. In late 2025, the National Assembly considered a provision in the 2026 Finance Bill that would have doubled the rate from 3% to 6%, but voted it down. The French Constitutional Council separately upheld the DST as constitutional in September 2025, settling a challenge that had questioned whether a gross-revenue tax of this kind was permissible under French law.7Tax Foundation. Digital Services Taxes in Europe, 2026
Until Pillar One is finalized and ratified by enough countries to take effect, the French DST stays in force with no scheduled end date. Companies within scope should plan for continued compliance and watch both the OECD timeline and U.S. trade policy, either of which could change the picture quickly.