French digital tax to raise around €400m from tech firms

France will raise around €400 million from its digital tax in 2020, according to Finance Minister Bruno Le Maire, who wants the European Union to respond immediately if the US goes ahead with retaliatory tariffs.

The levy is at the center of a dispute between the two countries over how to tax multinational tech giants. They had declared a truce until the end of this year, under which France suspended collecting the levy that hits some of the largest American companies and the US agreed to delay the implementation of tariffs on $1.3 billion of French products.

Both sides aimed to give more time to international talks on new taxation rules at the OECD, but those negotiations have faltered and likely won’t conclude until mid-2021.

“We know we are exposing ourselves to the triggering of sanctions from the US administration if we collect the national tax,” Le Maire said Tuesday. “France won’t back down in the face of threats or the possibility of sanctions.”

The US tariffs are due to come into force in early January, at which point Le Maire said he is counting on Europe to retaliate. France collected €357 million from its tax in 2019.

“If there are US sanctions against the application of French law, we will demand an immediate riposte at the European level,” Le Maire said.

The French have been in contact with the incoming administration of US President Joe Biden to stress that international taxation is a priority, Le Maire said. But there haven’t been formal negotiations with Biden’s team over how to resolve the dispute.

©2020 Bloomberg L.P.

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