France and US reach agreement on French tax for tech companies

France and the United States have reached an agreement on the tax previously introduced by France for large tech companies. US President Trump previously expressed his dissatisfaction with this and threatened import tariffs on French products.

In a joint press conference with Trump, French President Macron said a “very good deal has been struck.” According to Bloomberg, Trump did not immediately answer when he was asked to confirm the deal, but he did indicate that the first lady liked the French wine very much. He probably referred to earlier statements he made to American journalists; Trump said he would tax French wines heavily if France started taxing American companies.

The agreement does not mean that the French plans have been shelved. Macron has told journalists that companies affected by the tech tax will be allowed to deduct the tax from profits once a new international agreement is reached on how large internet companies should be taxed, Reuters writes. Macron says he is committed to reaching international rules. Earlier there seemed to be an EU-wide tax for large tech companies, but there was insufficient support for this. Subsequently, France, as a strong supporter of such a tax, introduced its own version.

This involves a 3 percent tax on the turnover of tech giants in France. This affects companies that annually generate more than 750 million euros worldwide with their digital activities and at least 25 million euros in France. It would involve about thirty companies, mainly American companies such as Google, Amazon, Facebook and Apple. But a number of companies from other countries also have to deal with the French tax.