France Turns Up the Heat: Digital Services Tax Doubles to 6%
The Big Picture: Paris just dialed its digital levy from 3% to 6%, and Silicon Valley is feeling the burn. The lower house of France’s parliament approved the hike on Tuesday, signaling that Europe’s patience for a long-stalled OECD solution is wearing thin.
The Details: The amendment, tucked into France’s 2026 budget bill, widens the tax bite on large tech companies that book hefty French revenues but light French tax bills, Law360 reports. With Brussels still debating a bloc-wide approach, lawmakers said the jump was needed “to restore fiscal fairness” while talks drag on. Tech giants have long blasted unilateral DSTs as double taxation, but the French finance ministry claimed the measure would add €700 million annually to the coffers.
Why It Matters: The reaction was swift. U.S. industry groups warned of fresh trade tensions, recalling Washington’s 2020 tariff threats over the original 3% levy. Tax professionals also note the clock is ticking on Pillar 1 of the OECD deal; every new unilateral tax raises the risk of a tit-for-tat spiral.
Around the Tax World
• OPT Payroll Holiday on the Chopping Block. Senator Bill Cassidy introduced a bill to scrap the FICA exemption for international students in Optional Practical Training, potentially slapping an 8% payroll tax on both students and their employers (The PIE News).
• ATO Sharpens Its APA Playbook. Australia’s Tax Office updated its internal guidance on Advance Pricing Arrangements, stressing “pragmatic” negotiations and warning taxpayers that collateral issues, such as withholding-tax gaps and PE risks, are now fair game (International Tax Review).
• Greenpeace Revives Billionaire Tax Push. Ahead of COP-30 finance talks, the NGO renewed calls for a global levy on ultra-rich fortunes, arguing that a 2% tax could bankroll climate and nature pledges, just as Tesla shareholders mull a US$1 trillion pay packet for Elon Musk (Greenpeace).
• U.S. Law Firm Flags ‘Tax Abuses’ in Spain. In a blistering white paper, Washington-based Robert Amsterdam urged the Biden administration to suspend tax-information exchanges with Spain, alleging discriminatory audits of U.S. investors (PR Newswire).
By the Numbers
Prime Number: 6%, that’s the new French digital services tax rate, double the previous levy and the biggest unilateral DST in the EU.
Looking Ahead
All eyes now turn to the U.N. talks on a global tax convention next month in New York, where negotiators will attempt to tame the growing patchwork of unilateral measures (Tax Notes).