I am advised that France have announced plans to enact a unilateral digital services tax (“the French DST”) which will apply to the revenues of certain activities of large digital companies with effect from 1 January 2019.
As the Deputy will be aware, a digital services tax was proposed by the European Commission in March 2018 (“the EU DST”), but no agreement has been reached on that at EU level. The French DST and the EU DST are similar, but not identical. They both propose a 3% rate of tax levied on gross turnover. Both have two thresholds which must be met for a company to be within scope. The first, which is identical in both the French and the EU DST, requires the company (or a corporate taxation group to which it belongs) to have worldwide annual turnover greater than €750 million. The second threshold is proposed by reference to the geographical scope of the tax - group revenues from taxable services greater than €50 million p.a. in the EU for the EU DST, or €25 million p.a. in France for the French DST.
Additionally, the services within scope differ between each. The EU DST sought to tax online advertising, the commission fees earned by connecting users on an online platform and the sale of user data. The French DST excludes taxing the sale of user data, except in situations where the sale relates to the placing of online advertising.
With respect to estimating the cost of the proposed French DST if full credit were given for it in Ireland, I am advised by the Revenue Commissioners that the available data is not sufficiently detailed to enable a calculation of the likely tax loss as a result of a digital tax in any specific EU Member State.