On 26 June 2019, the Commission Mixte Paritaire, a parliamentary committee composed of an equal number of representatives from the French National Assembly and the French Senate, agreed on the text of the Bill introducing the French Digital Services Tax (the “French DST”).

This text is likely to be formally endorsed by the National Assembly on 4 July 2019 and by the Senate on 11 July 2019.

An additional step before enactment of the Bill may consist in its submission to the French Constitutional Council by members of the Parliament. The Constitutional Council would then have one month to decide whether the Bill is compliant with the French Constitution.

If the Constitutional Council decides that it is compliant, the Bill should be enacted by mid-August 2019 at the latest. Administrative guidance is expected to be published by the French Tax Authorities shortly after.

The text adopted by the Commission Mixte Paritaire on 26 June 2019 is very similar to the draft voted by the National Assembly on 9 April 2019.

However, the main amendments attempt to clarify:

-  the scope of ancillary services (revenue from which will be included in the tax basis of the French DST), which is now defined by reference to the wording used by the CJEU in its case-law relating to single complex transactions for VAT purposes;

-  the territoriality of advertising revenue falling within the scope of the French DST, which is limited to advertising targeting users located in France when consulting the digital interface (and not revenue from all advertising placed on the digital interface when the user located in France consults the interface).

Amongst other noticeable adjustments, the first instalment to be paid in 2019 has been delayed by a month and should be due in November.

Despite the improvement of the Bill thanks to the parliamentary debates having taken place so far, some questions raised by practitioners and some members of the Parliament concerning the compliance of the French DST with higher legal standards and notably the French Constitution and EU law (e.g. freedom of establishment and freedom to provide services guaranteed by the TFEU) remain unanswered at this stage.

A review by the Constitutional Council would help shed light on some of these issues. Interestingly, the Bill now provides that, if the Government chooses not to consult the European Commission prior to enactment, it will have to justify this decision to the Parliament.