France government to strike down proposed DST rise to 6%

France’s minority government to remove National Assembly 2026 Budget amendment to double Digital Services Tax Jan 2026 (GAFAM tax) to raise €700m pa; US threatens immediate retaliation

As part of the fractious 2026 French Budget negotiations, Deputies in the French Parliament on 28 October voted to raise the country’s Digital Services Tax to 6% from 1 January 2026. But the minority government of Lecornu has already said it will seek to strike this down in the forthcoming weeks.

The vote was despite the minority government’s fears of US tariffs in the case of such a hike. Economy Minister Roland Lescure called on parliamentarians to restrain: “If we introduce a disproportionate tax, we will have disproportionate reprisals”

The so-called GAFAM Tax (Google; Apple; Facebook and Microsoft) raised €700m in 2024. The Finance Committee had last week proposed a rise to 15%.

The American Ways and Means Committee Chair, Jason Smith, on 24 October threatened retaliatory actions as it views DST’s as indiscriminately targeting US digital giants.

12 Sept: Constitutional court upholds DST confirming levy on major tech platforms is constitutional

On 12 September 2025, France’s Constitutional Council upheld the constitutionality of the 2019 Digital Services Tax (DST) in Decision No. 2025-1157 QPC.

Brought by Digital Classifieds France with support from firms like Airbnb Ireland, the challenge argued the DST violated equality and fairness principles by taxing some digital services while excluding others, applying group-level thresholds, and imposing a flat 3% levy. The Council rejected all claims, finding the distinctions rational, territorial rules appropriate, and the tax non-confiscatory. The ruling secures France’s authority to levy the DST on major digital platforms benefiting from French users.

This comes as the US steps up its retaliatory taxes review of DST.

This comes as global OECD Pillar 1  negotiations to realign taxation rights of cross-border digital services falters. France is in dire need to bring down its state budget deficit which may hit 6% for 2024 – 3% above the EU limit.

Most countries with DST’s had agreed a moratorium on changes until the OECD had completed the Pillar 1 reforms to avoid the US retaliating with trade sanctions.

Italy is reviewing withdrawing its DST thresholds to raise additional funding as it too is frustrated by slow progress on the OECD discussions.

As with countries like Italy, Spain and the UK, France introduced a controversial DST on revenues from online advertising, user data exchange and digital intermediation between online sellers and buyers.