US reportedly reaches digital tax deal with France

The US and France reportedly reached a deal over a new French digital tax.

Angela Lang/CNET

The US has reportedly reached a deal with France over a new French law that would see American tech giants pay more in taxes. French President Emmanuel Macron told reporters Monday that US tech companies paying the tax would be able to deduct it, according to Reuters.

On July 11, France’s Senate passed the bill creating a 3% tax on big tech companies providing services to French users. It could have a major impact on US giants like Apple, Facebook, Amazon and Google. France passed the taxation law a day after the Trump administration announced plans to investigate whether the planned digital tax amounts to an unfair trade practice by discriminating against US companies.

“We’ve done a lot a work on the bilateral basis, we have a deal to overcome the difficulties between us,” Macron reportedly told press Monday, speaking alongside US President Donald Trump after the G7 summit in France.

In Google’s written testimony against the tax, Nicholas Bramble, the company’s trade policy counsel, called it “a sharp departure from long-established tax rules.”

In July, Trump hinted that French wine could be subject to a new tariff thanks to what he called Macron’s “foolishness” over the French taxation laws.

“France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the USA,” Trump tweeted. “We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine!”

US investigation into France’s new rules will be conducted by US Trade Representative Robert Lighthizer. It will be a 301 probe, the same kind that led to new tariffs on China last year.

“The United States is very concerned that the digital services tax, which is expected to pass the French Senate tomorrow, unfairly targets American companies,” Lighthizer said in a statement in July. “The president has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”

The new French law affects companies that make at least €750 million in revenue worldwide — around $844 million — as well as €25 million in digital sales in France. Over the past decade, the French government and the European Union have been investigating Apple, Google, Amazon and Facebook to determine whether they pay enough in taxes.

The White House, Apple, Facebook, Spotify and the Internet Association didn’t immediately respond to requests for comment. Netflix, Amazon and Twitter declined to comment. In place of a comment, Google pointed to Bramble’s testimony last week.

First published at 9:51 a.m. PT on Aug. 26.
Updated at 11:42 a.m.: Amazon declined to comment; 12:38 p.m.: adds Google comment; Aug. 27 at 10:50 a.m.: Twitter declined to comment

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