Article 1 of the loi 2019-759 pf 24th July,
2019 instituted a tax on digital serviced known as the « GAFA
Gafa ») payable by the largest digital service operators.
France has forged ahead with a turnover tax orientated
approach, whilst Europe consolidates its overall doctrinal
framework. Note that the tax is due on the first remunerated click,
but is only payable when a certain level of turnover is
reached.
However, the point that appears to be escaping most operators is
that there is already a prepayment or acompte of the tax due in
November 2019, based upon the chargeable turnover for "clicks" in
2018. See the derogation to article 1693 quater CGI:
"III.-Par dérogation au I de l'article 1693 quater du code
général des impôts, la taxe prévue à l'article 299 du même code due
au titre de l'année 2019 donne lieu au paiement d'un acompte
unique, acquitté dans les conditions suivantes :
1° Pour les redevables de la taxe sur la valeur ajoutée soumis au
régime réel normal d'imposition mentionné au 2 de l'article 287
dudit code, lors du dépôt de l'annexe à la déclaration mentionnée
au 1 du même article 287 déposée au titre du mois d'octobre ;
2° Dans les autres cas, au plus tard le 25 novembre, lors du dépôt
de l'annexe à la déclaration prévue au même 1 déposée auprès du
service de recouvrement dont relève le siège ou le principal
établissement du redevable.
Cet acompte est égal au montant de la taxe qui aurait été liquidée
sur la base des sommes encaissées en 2018 en contrepartie du ou des
services taxables fournis en France. Le pourcentage représentatif
de la part des services rattachés à la France défini au IV de
l'article 299 bis du même code est évalué lors de la période
comprise entre le lendemain de la publication de la présente loi et
le 31 octobre 2019. L'acompte est dû par les personnes pour
lesquelles sont dépassés les seuils mentionnés au III de l'article
299 du code général des impôts, déterminés à partir de ces mêmes
sommes et de ce même pourcentage, sans préjudice de son
remboursement lorsqu'il est constaté que les conditions
d'assujettissement ne sont pas remplies.
Pour l'assujettissement et la liquidation de la taxe prévue à
l'article 299 du même code due au titre de l'année 2019, le
pourcentage représentatif de la part des services rattachés à la
France défini au IV de l'article 299 bis dudit code est évalué lors
de la période comprise entre le lendemain de la publication de la
présente loi et le 31 décembre 2019.
IV.-L'option prévue à l'article 1693 quater B du code général des
impôts peut, pour la taxe prévue à l'article 299 du même code due
au titre de l'année 2019, être exercée jusqu'au 31 octobre 2019 et
prend effet à partir du premier paiement à compter de cette
date."
In other words, a non EU GAFA only has until 25th November, 2019
to appoint a Fiscal representative, pay the acompte or prepayment,
and file the necessary return based upon the tax base for 2018.
Note that the percentage of pro rata depends upon the proportion of
French source "clicks" to Worldwide "clicks" between 30th July and
29th October, 2019.
It is therefore essential to take advice on this promptly.
Article 299 quater CGI sets the rate of the tax at 3%.
The French administration has now published in the Bofip of
16th Octobre 2019, under reference BOI-TCA-TSN,
BOI-TCA-TSN-20 et BOI-TCA-TSN-30, up
to 29th November 2019 inclusive,
its partial commentaries on the tax.
These concern the accounting requirements and the necessarily
linked declarative requirements.
For the larger operators there are rules on the allocation of
the tax base within a consolidated group. Please note that the
French have a very clear idea of international tax consolidation
and its declarative requirements having had a régime known
as bénéfice consolidé for foreign and domestic
subsidiaries in addition to the domestic integration
fiscal, and a separate benefice
mondial for permanent establishments extending their
territorially restricted impôt sur les sociétés.
However, as the tax is treated as a turnover tax, and is to be
administered by the same service that deals with intra EU VAT
matters, It would be unwise to assume that this is any way similar
to a Unitary tax, even though the tax basis is prorated according
to the French digital activity recorded as against entity or group
turnover worldwide. The civil servant drafting the framework has
evidently been looking at Google Analytics to check that the
information required is not only available but able to be
compartmentalised.
The commentaries also concern the recovery of the GAFA Tax, its
audit and assessment and inevitably, contentious procedures.
It is clear that the French administration anticipates being
able to tax European "GAFAs", as much as their American
counterparts, as the tax is placed squarely within the EU Turnover
tax type category, and will therefore attempt to use the tax
information and tax recovery provisions within the EU and the
EEA.
Non EU or non-EEA States, for example the UK post-Brexit, will
be required to appoint a fiscal representative in France of a
similar nature to a TVA representative. EEA Members Norway
and Iceland will be dispensed from that as their Tax Treaties with
France contain suitable information gathering and recovery
mechanisms.
However, the administrative commentaries on the taxes its
scope of application, its tax point (fait générateur), its
due dates, the tax base and its payment will be included in a later
publication.
Those concerned can make representations to the administration
at a given e-mail address before 29thNovember, 2019
inclusive.
The main point to note is that the tax will be recovered for
year N by two acomptes or prepayments in year N, followed by a
regularisation process in the declaration made in year N+1 which
will detail and finalise the actual flows during the year N
declared.
I will also be happy to assist the service providers concerned
in advising on and making any representations needed I the
technical French needed. There will be a major issue as to
the definition of common terminology between English and French,
and other languages and the extent of the tax obligations
which tend to slip through any attempt at uninitiated
translation.
It is likely that Accountancy firms and auditors will need some
assistance in this, particularly in grouping worldwide digital
turnover in the various areas affected.
I stress that I have worked in a French multinational's head
office tax department charged with dealing with the
group's benefice consolidé, and also with the Renault
VAT declaration.
An executive summary of the tax can be obtained by request from
the e-mail below, there will be a small fee.
Peter Harris
peter.harris@overseaschambers.com
(+44) (0) 1534 625879