- Increase in Digital Services Tax: France is proposing to increase the Digital Services Tax (DST) rate from 3% to 5%, effective January 1, 2025, targeting large international digital service providers with significant market shares.
- Fiscal Impact: The increase is expected to generate an additional EUR 500 million for the French public budget, reflecting the government’s need for increased funding amid fiscal challenges.
- Potential Reactions and Global Context: If passed, the amendment could provoke retaliatory actions from the US, including increased customs duties on French products, and may lead digital service providers to raise service prices to offset the tax increase, highlighting the broader trend of governments worldwide adapting tax measures for digital services.
- Removal of Revenue Thresholds: The draft budget law in Italy proposes eliminating the existing revenue thresholds for the Digital Services Tax (DST), which currently applies only to larger companies.
- Wider Applicability of DST: By removing the thresholds, more businesses will be subject to the 3% DST on revenue from advertising, digital interfaces, and data transmission, significantly expanding the tax base.
- Implementation Timeline: The proposed changes would take effect in the calendar year 2025, requiring companies to assess their services and establish processes to track taxable revenue for DST compliance, impacting their payment and filing obligations starting in 2026.
Spain: Digital Services Tax Targets Large Multinationals: 3% on Specific Revenue
- Scope and Application: The DST applies to revenues generated from online advertising, digital intermediation services, and the sale of user data by large multinational companies. Specifically, it targets companies with global revenues exceeding €750 million and Spanish revenues over €3 million.
- Tax Rate and Collection: The tax rate is set at 3% on the revenues from the specified digital services. Companies are required to geo-locate their customers to determine if they are subject to the DST. The tax is collected quarterly.
- Impact and Compliance: The DST has significant implications for companies’ GDPR and IP policies. It also requires detailed record-keeping and reporting to comply with the tax administration’s requirements