Enacted in mid-2019, the French Digital Services Tax (DST) is supposed to be temporary and to be repealed as soon as new appropriate rules aimed at taxing income from digital services are adopted at an international level.

This explains why the French Government agreed, following discussions in Davos in January 2020, to postpone until December 2020 the collection of the French DST installments due in April and October 2020 in respect of French DST for 2020, so as to allow time for the negotiation of a global agreement at the OECD level. This postponement did not impact the French DST due for 2019, in respect of which the balance was generally due in April 2020.

Following the publication in October 2020 by the OECD of blueprints for a solution to the tax challenges arising from the digitalization of the economy and the acknowledgement that a multilateral solution will not be agreed by the end of 2020 as originally envisaged, the French Minister of Finance, Bruno Le Maire, publicly announced on 18 October 2020 that France is finally going to tax “digital giants” in December 2020.

As announced back in January, taxpayers will therefore have to file and pay – without incurring any late payment interest or penalties – in December 2020 (in principle together with the filing and payment of VAT due in respect of November 2020) the two installments which should have been paid in April and October 2020, with a final assessment and balancing payment in April 2021.

This decision is reopening the debate on the multiplication of DSTs at domestic level as an increasing number of countries, including for example the UK and, more recently, Spain, have introduced or are introducing such taxes. Such multiplication could notably raise double taxation issues which would not necessarily be eliminated by current double tax treaties.

The French DST is, now more than ever, alive and kicking, and only a satisfactory outcome of the discussions at the OECD level, expected in 2021, could convince the French Government to put a definitive end to this unilateral measure.