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France has approved a digital services tax despite threats of retaliation by US

324 points by adzicg 7y ago

deleted 7y ago
[deleted]
99052882514569 7y ago
Taxing digital companies based on digital presence certainly makes sense to me, as a layperson. A company that's selling ads to a French company that wants to show those ads to French users is doing business in France, end of story. Taxing only very large corporations - that's a little more questionable, but plenty of countries (including the US) treat small businesses preferentially, so it's not like it's unprecedented.
- mywittyname 7y ago
  Taxation/regulations can place an undue burden on smaller companies. So I think it's perfectly acceptable to use size as a component of taxation. It's like progressive taxation applied to business.
  - aey 7y ago
    No matter how the law is written, if the result is that the exceptions only apply to French companies and not to the US, it’s bullshit :). They could pick arbitrary ways to bisect the set until they get the desired result.
    - dfxm12 7y ago
      That's not the case. Per the article: About 30 companies will pay it - mostly US groups such as Alphabet, Apple, Facebook, Amazon and Microsoft. Chinese, German, Spanish and British firms are also affected, as well as the French online advertising firm Criteo.
    - deleted 7y ago
      [deleted]
    - jorge-d 7y ago
      Who said it was only targeting US companies? 26 companies fall under the required threshold. Not all of them are US based and there's even a French one (criteo). Here is the full list [1]: • Sales of goods: Alibaba, Amazon, Apple, Ebay, Google, Groupon, Rakuten, Schibsted, Wish, Zalando. • Services: Amadeus, Axel Springer, Booking, Expedia, Match.com, Randstad, Recruit, Sabre, Travelport Worldwide, Tripadvisor, Uber. • Advertisement: Amazon, Criteo, Ebay, Facebook, Google, Microsoft, Twitter, Verizon. [1] http://www.lefigaro.fr/conjoncture/2019/03/20/20002-20190320ARTFIG00213-la-taxe-gafa-concerne-26-entreprises-en-france.php http://www.lefigaro.fr/conjoncture/2019/03/20/20002-20190320...
      - mises 7y ago
        Most of those are still American businesses (twenty of twenty-nine, or over two-thirds). Another interesting way to look at it would be by revenue breakdown - I suspect the total revenue of American companies may be disproportionately high.
        romwell 7y ago
        Yeah right, who'd even notice Alibaba? FYI, Alibaba's revenue (~56B) exceeds that of Ebay (~10B), Uber (~11B), Expedia (~11b), Twitter (~3b), Groupon (~3v) and Tripadvisor (~2b) combined. Yes, Amazon/Apple/Microsoft/Google/Verizon are still huge. But it doesn't mean there aren't other big fish out there.
        azinman2 7y ago
        But what’s Alibaba’s revenue from France? I suspect the proportion is quite low compared to American companies.
        romwell 7y ago
        What's Verizon's revenue from France? I suspect the proportion is quite low compared to Chinese companies.
        7y ago
    - liberte82 7y ago
      Why? Is only the US allowed to practice protectionism?
      - ziddoap 7y ago
        Very salient point. It's funny that the US is allowed to tariff anyone who breathes at them wrong under the guise of protecting US jobs/etc. but they are up in arms when another country decides to implement anything remotely seen as "against the US".
        weber111 7y ago
        Please don't confuse the US with our government! (or, rather, with the subset of people in our government who happen to be talking at a given time---there are many levelheaded, effective people working in our government who never enter the spotlight)
        ziddoap 7y ago
        I try to avoid painting with a broad brush wherever possible, but I was also trying to be sufficiently succinct. There is, of course, good to be found within the US government. Although, to an outsider, it feels like one has to look much harder to find that good now adays.
      - jtx22 7y ago
        No, China is the protectionism King.
  - magduf 7y ago
    Exactly. A company with only 1 person has to spend a large share of its time-resources just complying with taxes and regulations. The more people in the company, the lower the proportion of those time-resources are needed. With a large company, it's easy to employ someone (or a team even) to do that work full-time, but for a tiny company it's impossible; they wouldn't get any actual work done to keep the company running. This would have the effect of killing small business, which would provide a huge inertia advantage to large businesses (which started small, when they didn't have so many regulations).
- alt_f4 7y ago
  > company that's selling ads to a French company that wants to show those ads to French users is doing business in France, end of story. yeah, so taxes make sense to pay for the roads, bridges and healthcare that these ads are using.
  - xkcd-sucks 7y ago
    Given the effect of social networking products on mental health, in this light it absolutely makes sense for countries with nationalized healthcare to tax big tech
    - alt_f4 7y ago
      well, it only "makes sense" in case you are literally insane
      - sctb 7y ago
        Could you please review the guidelines? You've been breaking them quite a bit and eventually we ban accounts that won't stop. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - 99052882514569 7y ago
    Taxes make sense to pay for the court system that's enforcing contracts, just to name the first thing that comes to mind.
  - ziddoap 7y ago
    Where the taxes are coming from and what they are used for do not need to be in the same industry or sector. Maybe it's different where you live? E.G. An oil company being taxed for the revenue it made during an oil project does not get ear-marked for oil-only usage by the government.
  - Voloskaya 7y ago
    Taxes in France (and in many other more [than the US] socialist countries) are not just about paying for the public infrastructure that you use. It's about contributing to the development of the society by taxing very lucrative businesses and individuals (and also taxing not so lucrative businesses sadly). If you are an individual in France, and you are well off, you will pay much more taxes than what the state pays in infrastructure for you, why do you think it should be different just for internet businesses? You may not agree with that philosophy, in which case you can decide to stop doing business in France. Considering the amount of cash GAFAs make, I would wager they will continue doing business in France and pay that 3% tax rather than miss 65M wealthy customers.
- bluecalm 7y ago
  It's really not that simple. They don't use any of the country infrastructure or workers. If I make a video game and sell it to a person in France does it mean I do business in France? It seems to me it should be treated the same as French person coming to my country, buying my game and going back home. We've just skipped on unnecessary traveling. Those things are subject to debate and power struggle but it's clear that: I sell it to you so I do business where you live isn't story-ending argument. In fact I think it's both not very consistent with general tax law principles nor practical as the burden of complying with regulations in every country you sell to even if you don't have presence there means many companies dummy won't sell at all to smaller countries.
  - Renaud 7y ago
    >France does it mean I do business in France? It seems to me it should be treated the same as French person coming to my country, buying my game and going back home. In that case you, the vendor, would need to pay taxes where you sold the game. The problem with these large companies is that they basically pay little to no taxes _anywhere_, an optimisation that only large companies can really afford.
    - bluecalm 7y ago
      They pay taxes where they are located. I am opponent of corporate income tax as I think it's the worse possible way to get about taxation. France is already collecting VAT on what Google sells there. They could increase that if they want. Why should it matter to them if Google turns profits or not? The concept of "profit from sells to France" isn't really well defined either, their profit depends on cost of operating and those depends on laws and regulations of the place they actually use to make their product.
      - michaelmrose 7y ago
        >They pay taxes where they are located. The sale can trivially be said to occur in a different jurisdiction or they can make zero profit because that money is owed to a another company that exists to facilitate them not paying taxes. The only thing that they can't move is the customer which is why this makes sense.
- the-dude 7y ago
  Not to refute your point, but they surely already charge VAT. However, this is commonly described as a tax for the buyer, not the seller. On the other hand, most revenue is probably B2B and business reclaim their VAT.
  - 99052882514569 7y ago
    Customers buying from local businesses that compete with them also pay VAT, so the consumer side of it is fair. But local businesses themselves pay much more in corporate taxes, which is not. You are free to argue that the playing field can be likewise leveled by lowering corporate taxes to Ireland's levels. That's a debate for the French to have, as citizens of a sovereign country. It is not a decision to be forced on them by global tax loopholes.
    - the-dude 7y ago
      I was not argueing anything.
jbigelow76 7y ago
Good. Next step, have EU countries come up with an estimation of the value of their citizens' private data that FB and Google gobbles up and tax them on that too. Edit: companies -> countries
- dahfizz 7y ago
  Does that mean that EU citizens should also pay for these services? Or do you expect these companies would continue to operate in the EU with no net profit.
  - negrit 7y ago
    they make money out of you, you're already paying.
  - jbigelow76 7y ago
    Yes, they should. FB doesn't want to get taxed? Create a non-tracking version and paywall it, I would actually pay for that myself.
    - dahfizz 7y ago
      You and maybe a dozen other people. Social media is worthless without widespread adoption.
      - Qwertystop 7y ago
        It could potentially share the backend -- track only those people who are on the free version, but keep everyone on one network. Also, no. Social media existed before the current big general-purpose networks. See Usenet, email lists, IRC, forums, etc. A single big network with no particular purpose or common interest provides different benefits, better in some ways and worse in others, but niche networks still have their own worth.
      - jbigelow76 7y ago
        I should have expanded more on your original reply in my parent response but rather than editing it I'll continue it here. You said: Or do you expect these companies would continue to operate in the EU with no net profit. A tax doesn't have to eat up all the net profit. Googling "how much is a Facebook user worth" comes back with about $158 dollars, whether that's accurate or not is beside the point, some value can be derived[1], France can say "we want a X% tax on that value". If the tax is too high FB leaves the market and France gets nothing so there is little incentive to do that[2]. FB then has to take the cost of servicing a user against their value minus the tax and decide if they want to continue as is, offer a paywall option to avoid the tax, or leave the market altogether... I don't understand why this would be so controversial? [1] Whether FB or regulators should set that value is up for discussion. [2] Some would see FB as such an overwhelming societal net negative they would want to tax it out of existence, but that could be true for any industry (fossil fuels, tobacco , meat, etc...)
peteretep 7y ago
I think the Brexit negotiations have probably shown Europe the power of sticking together, and presumably France feels that the rest of the EU has its back here.
- baud147258 7y ago
  No, EU isn't backing this, because in that case it would have been an EU-wide tax, not in just in one country. The EU tried to establish an equivalent tax, but there was pushback from countries that are taking advantage of it (Ireland, Luxembourg) Edit: From the French newspaper Le Monde [1], it was Ireland, Sweden, Danemark and Finland which opposed the idea. And from this article [2], Germany didn't help a lot, fearing tariff on their car industry. [1]https://www.lemonde.fr/economie/article/2019/07/11/le-parlement-francais-adopte-definitivement-la-taxe-gafa-contestee-par-les-etats-unis_5488135_3234.html https://www.lemonde.fr/economie/article/2019/07/11/le-parlem... [2]https://www.lemonde.fr/idees/article/2018/12/06/taxe-gafa-une-nouvelle-occasion-manquee_5393487_3232.html https://www.lemonde.fr/idees/article/2018/12/06/taxe-gafa-un...
  - peteretep 7y ago
    I think this will play out differently, and doubly so if American sabre rattling continues
  - Avamander 7y ago
    Ireland and Luxembourg are a small minority, fortunately or unfortunately.
umeshunni 7y ago
Interestingly, the only recent French tech company to be even remotely globally relevant (Criteo), is also affected. https://en.wikipedia.org/wiki/List_of_companies_of_France https://en.wikipedia.org/wiki/List_of_companies_of_France is a good list to look at. There is only one other software/internet company founded in France since 2000 in the 'Notable' list - 360Learning. About a third of the list was founded before 1900. A very different list than what you'd see in the US.
- bojan 7y ago
  Sogeti is also very large, founded in 2002.
  - umeshunni 7y ago
    Looks like they were acquired by Capgemini
    - user5994461 7y ago
      It's not a tech company. It's a contractor body shop, like Accenture. Sogeti merged very soon after it was formed. It's never really been known as its own company.
- gourou 7y ago
  France is an ecosystem where smaller (tech) companies get acquired by massive conglomerates (Vivendi, LVMH...). Or more recently like Zenly's acquisition by Snapchat. https://en.wikipedia.org/wiki/Vivendi https://en.wikipedia.org/wiki/Vivendi https://techcrunch.com/2017/06/21/snapchat-buys-zenly/ https://techcrunch.com/2017/06/21/snapchat-buys-zenly/ While there are some French tech unicorns (BlaBlaCar, Criteo, Veepee, Doctolib) a lot of French founders just create their company in the US (Docker, Lending Club, Wit-AI) because the labor code is simpler and there are more VC funds. The current administration is trying to change that with Station F and by making it easier to get foreign workers visas but it's a long shot. https://en.wikipedia.org/wiki/Station_F https://en.wikipedia.org/wiki/Station_F https://visa.lafrenchtech.com/ https://visa.lafrenchtech.com/
r00fus 7y ago
I'd guess it's even more palatable for France if the US threatens. The combativeness from the US helps foreign leaders to look stronger by creating a nationalist confrontation. Is this tax functionally different from tariff?
- Xixi 7y ago
  Given that French companies are also affected, I fail to see how it could be construed as a tariff. The goal of tariffs is to penalize foreign corporations. That tax is directed at a sector. It will not help the few French actors in that sector become more competitive.
  - vuln 7y ago
    There is only one French company affected as another commenter pointed out.
  - r00fus 7y ago
    It will create a local market opportunity if FB, etc, pull out. See Austin vs. Uber - the absence of ride-shares launched local alternatives that quickly took that marketshare until the locality changed it's stance. It will likely act much like a tariff as I doubt any of these megacorps will pull out.
pkaye 7y ago
> The French government has argued that such firms headquartered outside the country pay little or no tax. Isn't that largely due to EU laws and the decisions of Ireland and a couple other countries.
- 99052882514569 7y ago
  Let's say it is. Why would that change anything? France's government isn't trying to target or punish anyone (whether Ireland or Google), it just wants to stop the corporate tax avoidance it sees as unfair.
  - pkaye 7y ago
    I'm saying if the EU states all worked together on taxation rules none of the tech giants could take advantage of them. Also Google could do a little payback by moving the higher pay jobs from France over to neighboring countries like Germany.
    - luckylion 7y ago
      The EU can't work together on this, because their motives are incompatible. France, Germany want the corporations to pay taxes in France and Germany for the business they do in those countries. Ireland's business is offering a tax cut to the corporations so the corporations don't pay taxes in France or Germany and Ireland get's a cut in return. Ireland has no interest in changing this, obviously.
  - buboard 7y ago
    What you call avoidance is the essence of EU. Undoing that would bring us back to pre-EEC situation
    - 99052882514569 7y ago
      Tax avoidance via jurisdictional arbitrage is certainly not the essence of EU.
bko 7y ago
I never understood the logic behind taxing large internet businesses. The idea behind taxes is that you use some public resource and you pay for that service. You own a home in a neighborhood, you pay property tax that funds the schools. You drive a car, you pay gasoline tax that funds the streets. You hire workers locally, you pay the tax to pay back all the contributions public institutions made to adding the skills to the worker. But the idea that a company like Amazon owes some tax to France doesn't make sense. Sure the delivery person uses the roads, but they pay the gasoline tax and the delivery company pays taxes. What public resources did Amazon, a US company, use from France? The other theories of taxation is that it should be used to raise revenue from the best means possible. I disagree with that framework but applying taxes arbitrarily hardly seems fair or the best way to raise revenue. The other argument is that the government should "level the playing field". But again arbitrarily punishing or helping some corporations opens up the possibility of corruption and corporate meddling as corporations look for favors. Much of the edge Amazon has versus local retailers is that it is more efficient. It doesn't take up store space (and pay taxes on the land) and it doesn't have to hire a lot of local workers (and pay taxes on their salaries). It's simply more efficient and its services are appreciated by the consumers.
- Vinnl 7y ago
  > What public resources did Amazon, a US company, use from France? Digital infrastructure, anti-poverty programs that mean potential customers still have something to spend, financial infrastructure, legislation, ...
  - deleted 7y ago
    [deleted]
  - tzs 7y ago
    Shouldn't that be covered by the 20% VAT that Amazon pays on goods and services sold to entities in France?
    - bryanlarsen 7y ago
      Is VAT paid when Google shows an American ad to a French person? The tax is on "digital services". It's unclear if the tax is on physical services from digital companies.
deleted 7y ago
[deleted]
buboard 7y ago
I just hope the US does not "retaliate" on this. EU entrepreneurs are too dependent on US businesses.
- simion314 7y ago
  How, they would also tax big companies "hidden" profits ? Some US citizens are asking for this already, the French tax is not target at a country.
  - buboard 7y ago
    They would tax digital companies doing businesses in the US.
    - simion314 7y ago
      Would they exclude US companies doing business in US?
      - buboard 7y ago
        obviously yes. we are in a trade war
        simion314 7y ago
        This makes no sense, France is not excluding french companies. there is no war , they probably need more money so they found some group to tax, in Romania the government is also in big need of money so they put a tax on telecom companies, should the UK queen get upset now if a UK telecom company that makes business here is taxed more? I mean there are no exceptions or protectionism involved but some politicians can let an opportunity to spread their agenda.
- glerk 7y ago
  I really wish US companies would take a more forceful approach with these rogue governments. “You get off our back or we pull out of your countries”
ElKrist 7y ago
The US administration is presenting the new tax as if it was specifically targeted to US companies because of their origin. Like a tariff. It is not the case at all. Yes the biggest tech giants that do not pay enough tax are mostly from the US (also other companies from other countries are affected too) But it is not because they are from the US that this new tax is created. It is simply because they don't pay enough tax
- fiter 7y ago
  I suppose it's just like how the tax law changes in the US were not designed to hurt high-tax liberal states more than low-tax conservative states, but that the high-tax liberal states were just taking advantage of the standard deduction. Unfortunately in these cases, perception is just as important as the nominal reason.
  - Nasrudith 7y ago
    How can you tell that they weren't? There are always pretexts and blindly trusting face value explanations for a policy is dangerously naive.
    - fiter 7y ago
      I apologize for not being more clear as I agree with you completely: I cannot tell and neither can I tell about this French tax.
- liberte82 7y ago
  The US is big into tariffs these days, why do they complain when the same treatment is applied in return?
  - harry8 7y ago
    The US loves a cheat. Home town legal decisions are the norm. Gerrymandered electorates are the majority. The american exceptionalism of we can but you can't is openly embraced by all in politics and the media. Regulatory capture is the norm. Revolving door Washington lobbyists is not even a story anymore. Cheating is an absolute way of life nowadays. Which is really, really strange because it seems to me that most Americans really don't like cheats and cheating. Brady.
alt_f4 7y ago
Trump is right on this one -- this measure is definitely anti-competitive and specifically aimed at American tech companies. I hope he is swift to retaliate with appropriate tariffs. Failing to do so will bring a wave of random EU taxes on American tech companies, which will eventually lead to lower profits and engineer salaries.
- simion314 7y ago
  How, did you forgot how big US is? We are reminded here on HN how big US is, so it is natural that some US companies will also fall into that tax laws. What will Trump do? tax smaller companies so non US ones are hit harder ? Off topic, did the China tariffs had any good side effect so far?
  - superkuh 7y ago
    Which China tariffs? The extreme ones China had been using the last few decades or the recent US ones in response to China's longstanding tarriffs?
    - simion314 7y ago
      The ones we read on HN, were there any good consequences so far?
  - fiter 7y ago
    Arguably the China tariffs are resulting in manufacturing being distributed to other countries. This could be considered a good side effect from a fault tolerance perspective.
    - simion314 7y ago
      Agree, also China,India and other countries will invest more into reducing their dependencies on US which is as you said good from a fault tolerance perspective
      - 7y ago
dustinmoris 7y ago
Previous discussion: https://news.ycombinator.com/item?id=20409591 https://news.ycombinator.com/item?id=20409591
- clamprecht 7y ago
  It's interesting to compare the general sentiment of the comments on that post, which was posted 8 hours earlier than this one. Presumably those comments are more from Europeans, and comments in this post are more from people in American time zones.
simplecomplex 7y ago
Instead of taxing companies because it’s an easy method to steal money, maybe France should focus on enabling their people to create a company like Amazon or Facebook and actually generate wealth instead of taking it?
- alt_f4 7y ago
  too hard
- effie 7y ago
  Why wouldn't they do both? "Stealing" money via taxation is a legal and logical way to get some money to support their other operations, perhaps even "enabling their people".
csomar 7y ago
This is a stupid move. The tax is not payed by big tech giants. Not by both, either. It's complicated and depends on who needs whom the more. If there are no alternative to AWS, Google Adsense, or an American SaaS in France; the French people will be paying all of the tax. The big tech giants will just slap them with a 3% surcharge for being in France. This is different from US-China tariffs. If the US can source from other suppliers, the Chinese will need to lower their prices. Effectively making them pay the tax. It is a complicated and messy situation. The big tech giants are named that way because they are big and dominant. This makes them able to make the rules and circumvent the current ones. You'll need the whole EU (or maybe the EU/USA) to get them in line. France has been digging its own graveyard for a while. It seems that they didn't learn their lessons and now going full speed. If you are a French startup, you'll be less competitive. People hate paying more and it's not clear if they can deduct this tax (like VAT).
- toomuchtodo 7y ago
  This would incentivize competitors in France. That’s a good thing for France.
  - icebraining 7y ago
    From what I can tell, it will incentivize competitors everywhere, as long as they don't have revenues over €750M.
    - luckylion 7y ago
      Which is a good thing, too, as it incentivizes decentralization.
  - cyrksoft 7y ago
    With that argument, protectionism will incentivise competition. So why don’t we close the economy a bit?
    - toomuchtodo 7y ago
pbalau 7y ago
Who is this going to affect? The business: 1) between Facebook/Google and advertisers based in France? 2) between Facebook/Google and any advertiser as long as the ads are shown to people in France? 3) between Facebook/Google and any advertiser as long as the ads are shown to French people? If it is the first, then I don't really see a problem. FB and co can either stop doing business directly with French advertisers, or eat the tax, or increase the prices. If any of the others, then how would one go about determining how much money to pay without infringing on people's privacy? What would stop FB from either declaring a token amount of "business done in France - as per the options 2 and 3" or even say no business happened? How would the French gov check that? Get the list with all ads shown by FB over a month along with who they showed the ad to so the gov can check if those people where in France or not?
- baud147258 7y ago
  > Get the list with all ads shown by FB over a month along with who they showed the ad to so the gov can check if those people where in France or not? I think it would be closer to checking which French company bought ads from Facebook and for how much and taxing this.
  - pbalau 7y ago
    This is the case no 1 in my post. What you quoted refers to points 2 and 3.
    - baud147258 7y ago
      Sorry, I misread your post. I think that the tax don't apply for points 2 & 3, since it only concerns revenus made in France.
dahdum 7y ago
This tax is on sales and not profits, so won't it just become another line on the bill for French consumers? I imagine they'll just break it separately from VAT. Retroactively they'll have to eat the cost though.
- bagacrap 7y ago
  Yes, but only for larger tech firms, so this will somewhat level the playing field between large and small companies (offsetting the economies of scale that larger firms benefit from). This would hypothetically lead to greater consumer choice, which is probably a good thing.
wazoox 7y ago
The US has long been using their legal system to skew free market rules and favour their domestic markets and companies. DoJ is constantly "exporting" US law around the world by methods that border blackmail or even sometimes taking hostages. Fighting back has been long due. Though of course France should begin with EU free-riders, Luxembourg and Ireland...
- pas 7y ago
  > DoJ is constantly "exporting" US law [...] Could you explain what do you mean by this, and provide specific instances?
  - wazoox 7y ago
    For instance the 1977 (79?) law against corruption of foreign officials has been in almost all cases involving large companies, only been used against foreign ones, except in once case, Halliburton. In fact in that very case Valourec (French) was working on a common contract with Halliburton and was attacked first, but they negotiated by implicating their partner (both were punished). Concerning US embargoes, the DoJ has extorted many billion dollars from foreign companies for breaking these. However there was no embargo between, say, Germany and Iran; as some transactions happened to be in USD, DoJ consider that Deutsche Bank, by providing services priced in US$ to Iran, violated the US embargo. Ditto other European banks. This looks like blackmail: US Treasury grabbed more than USD 14 billions from European banks using this tactic. Also the US blocked various arms sales between various countries because the weapons used some US-made parts (typically some electronic chip deep inside), only to keep the deal to themselves. Basically that means that any company making transactions in US$ must comply to US law, always and everywhere. If my company sold some product to some Russian company with a price in USD, it could be sued by a US prosecutor. Then when visiting a friend in the US, I could be jailed (even if I hadn't no direct relation with the targeted sale, simply as a company board member or manager). If my product includes any US-made part, my international sales are depending upon US goodwill. Which, in the case of billion-dollars contracts, will probably enter the scene. Seems preposterous? It actually happened many times. It happened to the VP Asia of Alstom, jailed nearly 4 years in the US to blackmail his company for the sole benefit of General Electric. One of Deutsche Bank VP was extradited from Croatia to the US while on holidays, and jailed in a high security prison like a murderer. Etc.
cyrksoft 7y ago
Aren't they already taxed in Ireland, another EU country? Isn't this double taxation?
- effie 7y ago
  Yes, France wants money too. Not unreasonable, considering the companies' activities involve French infrastructure and French citizens.
ezoe 7y ago
What happened to a company who has no physical presence in France refuse to pay the tax on the ground that France has no jurisdiction upon them? Ordering French ISPs to block the web service of that company thereby breaking the fundamental human right of freedom of speech and no censorship.
- liberte82 7y ago
  Blocking a website is not “breaking the fundamental human right of freedom of speech and no censorship”, at least not in France.
- Someone1234 7y ago
  If they have French customers, the French government has jurisdiction. If they don't have French customers, the French government blocking them would have no impact.
- pmohun 7y ago
  I'm not sure the assumption that other countries give a damn about what the U.S. Constitution says is correct.
- baud147258 7y ago
  France is already censoring Internet. https://en.wikipedia.org/wiki/Internet_censorship_in_France https://en.wikipedia.org/wiki/Internet_censorship_in_France
- WaylonKenning 7y ago
  I'm not sure that fundamental right is correct, at least, outside of America. There's no fundamental human rights of freedom of speech and no censorship in New Zealand for example, as enshrined by law.
  - alkonaut 7y ago
    There are no freedom of speech laws that would apply to a corporation rather than a human, that I know of at least.
deleted 7y ago
[deleted]
sarcasmOrTears 7y ago
Taxes are never fair, that's why you'll never agree on them. It's a game of coercion and the only thing that can be done is choose who's the sucker that's gonna pay. Taxing big, multi-national companies is something that I can live with, strangely. I know it's wrong, but still less wrong than having poor/middle-class directly pay the bill. In the end they have the money to pay tax consultants and the money to deal with it.
yeahitslikethat 7y ago
Why aren't services, of any sort, taxed in the USA? We don't tax legal services or doctor visits. None of them. But we tax groceries. Incredibly regressive.
opportune 7y ago
Part of me originally wanted the US to retaliate since this theoretically threatens my paycheck, but a 3% tax on revenue generated within the country is pretty low and seems reasonable considering how ineffective taxing profits is due to loopholes. I really don't think it's sour grapes so much as trying to address the Irish/Luxembourgish tax schemes
- charlesdm 7y ago
  Correct in theory. But have you looked at french tax policy? The issue with new taxes is that often it starts at 3%, then goes up gradually to 5, then to 7, and before you know it you have a 15% turnover tax. France is a lovely country, but one of the worst players when it comes to tax policy. The never ending appetite to increase the spending of the state does not stop...
  - hmartiniano 7y ago
    Which is actually a good idea: increase tax on revenues for companies using tax-evasion schemes until it is no longuer profitable for them to continue doing so. Also, consider the fact that tax evasion is a crime in most countries and that this is a very bland measure when compared to what these companies (and their executives) really reserve.
    - eurg 7y ago
      increasing taxes makes tax-reduction-strategies _more_ profitable, not less also, tax-evasion and tax-reduction are two different things, equating them is an argument in bad faith
      - opportune 7y ago
        >tax-evasion and tax-reduction are two different things, equating them is an argument in bad faith I beg to differ, the only difference is that one is by definition illegal and the other is by definition legal. Tax reduction can mean chasing tax incentives responsibly, which is fine, but can also mean deliberately engaging in weird financial engineering that violates the spirit of the law but not the letter. Like if I max my 401k and HSA, get a $600k mortgage to max out the mortgage interest deduction, and count all my professional electronics as business expenses I am reducing my taxes but I am following the spirit of the law because I am reducing my tax burden by making decisions that tax policy is meant to encourage. If I incorporate in the Cayman islands and declare all my income through a Virgin Islands subsidiary operating through Panamanian bank accounts so that I can sell off shares of my business to a trust which I also own, all so I can turn personal income into capital gains earned in a different country even though I do my actual business and live in the US, I would definitely be violating the spirit of the law.
maitredusoi 7y ago
Amusing to read political comments on HN ... It is like discussion about programming laguages, just church wars ....
bfrog 7y ago
Please do this in the US, and use the money to fund the green new deal.
whb07 7y ago
Absent all this talk about fairness or not, if one were watching CNBC today, Cramer and the other analysts were asking themselves "what exactly is France selling to the U.S" and this is the list they came up with: 1. cheese 2. wine 3. .... After a couple minutes on the discussion, they came up with Airbus (not strictly French and made outside of France).
julienfr112 7y ago
There may be a complication : As EU is a single market, US retaliation (except maybe on Champagne and Camembert ...) cannot be targeted on France but on the whole EU. For example, Airbus headquarter is located in the Nederland, and has factories all over Europe. As such, EU will have to enter a fight a single country started. I really wonder what will happen next. Maybe Texas could raise the tax on red sole shoes https://www.google.com/search?q=red+sole+shoes https://www.google.com/search?q=red+sole+shoes ?
_zachs 7y ago
Amazon should and probably will just raise prices for French shoppers.
Hithredin 7y ago
Very interesting comments that reflects the difference of values between french and north americans!
alwayseasy 7y ago
European regulations and taxes always come up in these threads and some libertarians complain about how it's an unfair way to treat a digital company that shouldn't pay taxes. Just remember that the United States are subsidizing tech companies (tax amnesties) and all the upside (high salaries, innovation, stock market growth etc...) is going back to the US while the downside of tech companies (electoral manipulation, teen depression, tax avoidance, privacy breaches) is only felt in Europe with no upside.
- bacon_waffle 7y ago
  In addition, the United States is exporting its tax system around the world and imposing costs on the rest of the world in the process via FATCA and FBAR.
rdm_blackhole 7y ago
As much as I support governments cracking down on companies trying to dodge paying taxes, I can't help but feel like this is just for show. Since the yellow vests protests started last year(yes, they are still happening, although the number of protesters has been decreasing rapidly), the French government has been under pressure to stop taxing the middle class and go after other entities/individuals to raise money. It is no secret that France and most of the developed world is technically broke. With a debt to GDP ratio approaching 100%, the French leaders have to find money quickly or the whole welfare state will come to an end sooner than later. Considering the fact that this tax is supposed to bring in 400m per year, it is basically a drop in the ocean. But, what will happen is that Macron will spin it as a success and will tell people: "See we are taxing the bad guys." In the meantime, he will keep on increasing the taxes on the middle class covertly. The problem is that in a normal functioning democracy, the proceed of the taxes is used to increase the well being of the population. In France though, all new taxes raised are not used to create or maintain infrastructure or even subsidize basic services for its citizens. Most of the proceeds are actually used to pay off the debt. See the carbon tax from last year when the government admitted that only 50% would be allocated to actually fight climate change and the rest would be used for some other unrelated things. France as a whole has never been more taxed than now, and yet public services and public infrastructure(or whatever is left of it, after they nearly sold everything to private corporations) is falling into disarray. Emergency rooms are closing(They have been on strike for the last 3 months now), social services have been cut back, roads on the countryside are full of potholes, electricity/gas prices keep on increasing. The middle class is being bled dry by an overzealous state that does not know what to do anymore to fix the problems it created in the first place. For the last 30 years politicians from all sides of the political spectrum have done one thing and one thing only. Instead of reforming, they just tax, tax and tax more. Until there nothing left. That's why France is dying. That's why people like me who do not like what France has become have left to create companies/ pay taxes somewhere where I don't feel like I have to share 50% of my money with a state that provides very little to me.
vansteen 7y ago
Btw, on a tax manner, are these companies really American?
jplayer01 7y ago
This entire thread shows how much of a waste of time it is discussing taxes or government or social services (socialism!) or markets with Americans. They have such an incredibly skewed point of view based on an insanely unfair and unjust system of everything in the US.
Joseph64 7y ago
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324 points by adzicg 7y ago

deleted 7y ago

[deleted]

Taxing digital companies based on digital presence certainly makes sense to me, as a layperson. A company that's selling ads to a French company that wants to show those ads to French users is doing business in France, end of story. Taxing only very large corporations - that's a little more questionable, but plenty of countries (including the US) treat small businesses preferentially, so it's not like it's unprecedented.

mywittyname 7y ago
Taxation/regulations can place an undue burden on smaller companies. So I think it's perfectly acceptable to use size as a component of taxation. It's like progressive taxation applied to business.
- aey 7y ago
  No matter how the law is written, if the result is that the exceptions only apply to French companies and not to the US, it’s bullshit :). They could pick arbitrary ways to bisect the set until they get the desired result.
  - dfxm12 7y ago
    That's not the case. Per the article: About 30 companies will pay it - mostly US groups such as Alphabet, Apple, Facebook, Amazon and Microsoft. Chinese, German, Spanish and British firms are also affected, as well as the French online advertising firm Criteo.
  - deleted 7y ago
    [deleted]
  - jorge-d 7y ago
    Who said it was only targeting US companies? 26 companies fall under the required threshold. Not all of them are US based and there's even a French one (criteo). Here is the full list [1]: • Sales of goods: Alibaba, Amazon, Apple, Ebay, Google, Groupon, Rakuten, Schibsted, Wish, Zalando. • Services: Amadeus, Axel Springer, Booking, Expedia, Match.com, Randstad, Recruit, Sabre, Travelport Worldwide, Tripadvisor, Uber. • Advertisement: Amazon, Criteo, Ebay, Facebook, Google, Microsoft, Twitter, Verizon. [1] http://www.lefigaro.fr/conjoncture/2019/03/20/20002-20190320ARTFIG00213-la-taxe-gafa-concerne-26-entreprises-en-france.php http://www.lefigaro.fr/conjoncture/2019/03/20/20002-20190320...
    - mises 7y ago
      Most of those are still American businesses (twenty of twenty-nine, or over two-thirds). Another interesting way to look at it would be by revenue breakdown - I suspect the total revenue of American companies may be disproportionately high.
      - romwell 7y ago
        Yeah right, who'd even notice Alibaba? FYI, Alibaba's revenue (~56B) exceeds that of Ebay (~10B), Uber (~11B), Expedia (~11b), Twitter (~3b), Groupon (~3v) and Tripadvisor (~2b) combined. Yes, Amazon/Apple/Microsoft/Google/Verizon are still huge. But it doesn't mean there aren't other big fish out there.
        azinman2 7y ago
        But what’s Alibaba’s revenue from France? I suspect the proportion is quite low compared to American companies.
        romwell 7y ago
        What's Verizon's revenue from France? I suspect the proportion is quite low compared to Chinese companies.
      - 7y ago
  - liberte82 7y ago
    Why? Is only the US allowed to practice protectionism?
    - ziddoap 7y ago
      Very salient point. It's funny that the US is allowed to tariff anyone who breathes at them wrong under the guise of protecting US jobs/etc. but they are up in arms when another country decides to implement anything remotely seen as "against the US".
      - weber111 7y ago
        Please don't confuse the US with our government! (or, rather, with the subset of people in our government who happen to be talking at a given time---there are many levelheaded, effective people working in our government who never enter the spotlight)
        ziddoap 7y ago
        I try to avoid painting with a broad brush wherever possible, but I was also trying to be sufficiently succinct. There is, of course, good to be found within the US government. Although, to an outsider, it feels like one has to look much harder to find that good now adays.
    - jtx22 7y ago
      No, China is the protectionism King.
- magduf 7y ago
  Exactly. A company with only 1 person has to spend a large share of its time-resources just complying with taxes and regulations. The more people in the company, the lower the proportion of those time-resources are needed. With a large company, it's easy to employ someone (or a team even) to do that work full-time, but for a tiny company it's impossible; they wouldn't get any actual work done to keep the company running. This would have the effect of killing small business, which would provide a huge inertia advantage to large businesses (which started small, when they didn't have so many regulations).
alt_f4 7y ago
> company that's selling ads to a French company that wants to show those ads to French users is doing business in France, end of story. yeah, so taxes make sense to pay for the roads, bridges and healthcare that these ads are using.
- xkcd-sucks 7y ago
  Given the effect of social networking products on mental health, in this light it absolutely makes sense for countries with nationalized healthcare to tax big tech
  - alt_f4 7y ago
    well, it only "makes sense" in case you are literally insane
    - sctb 7y ago
      Could you please review the guidelines? You've been breaking them quite a bit and eventually we ban accounts that won't stop. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- 99052882514569 7y ago
  Taxes make sense to pay for the court system that's enforcing contracts, just to name the first thing that comes to mind.
- ziddoap 7y ago
  Where the taxes are coming from and what they are used for do not need to be in the same industry or sector. Maybe it's different where you live? E.G. An oil company being taxed for the revenue it made during an oil project does not get ear-marked for oil-only usage by the government.
- Voloskaya 7y ago
  Taxes in France (and in many other more [than the US] socialist countries) are not just about paying for the public infrastructure that you use. It's about contributing to the development of the society by taxing very lucrative businesses and individuals (and also taxing not so lucrative businesses sadly). If you are an individual in France, and you are well off, you will pay much more taxes than what the state pays in infrastructure for you, why do you think it should be different just for internet businesses? You may not agree with that philosophy, in which case you can decide to stop doing business in France. Considering the amount of cash GAFAs make, I would wager they will continue doing business in France and pay that 3% tax rather than miss 65M wealthy customers.
bluecalm 7y ago
It's really not that simple. They don't use any of the country infrastructure or workers. If I make a video game and sell it to a person in France does it mean I do business in France? It seems to me it should be treated the same as French person coming to my country, buying my game and going back home. We've just skipped on unnecessary traveling. Those things are subject to debate and power struggle but it's clear that: I sell it to you so I do business where you live isn't story-ending argument. In fact I think it's both not very consistent with general tax law principles nor practical as the burden of complying with regulations in every country you sell to even if you don't have presence there means many companies dummy won't sell at all to smaller countries.
- Renaud 7y ago
  >France does it mean I do business in France? It seems to me it should be treated the same as French person coming to my country, buying my game and going back home. In that case you, the vendor, would need to pay taxes where you sold the game. The problem with these large companies is that they basically pay little to no taxes _anywhere_, an optimisation that only large companies can really afford.
  - bluecalm 7y ago
    They pay taxes where they are located. I am opponent of corporate income tax as I think it's the worse possible way to get about taxation. France is already collecting VAT on what Google sells there. They could increase that if they want. Why should it matter to them if Google turns profits or not? The concept of "profit from sells to France" isn't really well defined either, their profit depends on cost of operating and those depends on laws and regulations of the place they actually use to make their product.
    - michaelmrose 7y ago
      >They pay taxes where they are located. The sale can trivially be said to occur in a different jurisdiction or they can make zero profit because that money is owed to a another company that exists to facilitate them not paying taxes. The only thing that they can't move is the customer which is why this makes sense.
the-dude 7y ago
Not to refute your point, but they surely already charge VAT. However, this is commonly described as a tax for the buyer, not the seller. On the other hand, most revenue is probably B2B and business reclaim their VAT.
- 99052882514569 7y ago
  Customers buying from local businesses that compete with them also pay VAT, so the consumer side of it is fair. But local businesses themselves pay much more in corporate taxes, which is not. You are free to argue that the playing field can be likewise leveled by lowering corporate taxes to Ireland's levels. That's a debate for the French to have, as citizens of a sovereign country. It is not a decision to be forced on them by global tax loopholes.
  - the-dude 7y ago
    I was not argueing anything.

jbigelow76 7y ago

Good. Next step, have EU countries come up with an estimation of the value of their citizens' private data that FB and Google gobbles up and tax them on that too. Edit: companies -> countries

dahfizz 7y ago
Does that mean that EU citizens should also pay for these services? Or do you expect these companies would continue to operate in the EU with no net profit.
- negrit 7y ago
  they make money out of you, you're already paying.
- jbigelow76 7y ago
  Yes, they should. FB doesn't want to get taxed? Create a non-tracking version and paywall it, I would actually pay for that myself.
  - dahfizz 7y ago
    You and maybe a dozen other people. Social media is worthless without widespread adoption.
    - Qwertystop 7y ago
      It could potentially share the backend -- track only those people who are on the free version, but keep everyone on one network. Also, no. Social media existed before the current big general-purpose networks. See Usenet, email lists, IRC, forums, etc. A single big network with no particular purpose or common interest provides different benefits, better in some ways and worse in others, but niche networks still have their own worth.
    - jbigelow76 7y ago
      I should have expanded more on your original reply in my parent response but rather than editing it I'll continue it here. You said: Or do you expect these companies would continue to operate in the EU with no net profit. A tax doesn't have to eat up all the net profit. Googling "how much is a Facebook user worth" comes back with about $158 dollars, whether that's accurate or not is beside the point, some value can be derived[1], France can say "we want a X% tax on that value". If the tax is too high FB leaves the market and France gets nothing so there is little incentive to do that[2]. FB then has to take the cost of servicing a user against their value minus the tax and decide if they want to continue as is, offer a paywall option to avoid the tax, or leave the market altogether... I don't understand why this would be so controversial? [1] Whether FB or regulators should set that value is up for discussion. [2] Some would see FB as such an overwhelming societal net negative they would want to tax it out of existence, but that could be true for any industry (fossil fuels, tobacco , meat, etc...)

peteretep 7y ago

I think the Brexit negotiations have probably shown Europe the power of sticking together, and presumably France feels that the rest of the EU has its back here.

baud147258 7y ago
No, EU isn't backing this, because in that case it would have been an EU-wide tax, not in just in one country. The EU tried to establish an equivalent tax, but there was pushback from countries that are taking advantage of it (Ireland, Luxembourg) Edit: From the French newspaper Le Monde [1], it was Ireland, Sweden, Danemark and Finland which opposed the idea. And from this article [2], Germany didn't help a lot, fearing tariff on their car industry. [1]https://www.lemonde.fr/economie/article/2019/07/11/le-parlement-francais-adopte-definitivement-la-taxe-gafa-contestee-par-les-etats-unis_5488135_3234.html https://www.lemonde.fr/economie/article/2019/07/11/le-parlem... [2]https://www.lemonde.fr/idees/article/2018/12/06/taxe-gafa-une-nouvelle-occasion-manquee_5393487_3232.html https://www.lemonde.fr/idees/article/2018/12/06/taxe-gafa-un...
- peteretep 7y ago
  I think this will play out differently, and doubly so if American sabre rattling continues
- Avamander 7y ago
  Ireland and Luxembourg are a small minority, fortunately or unfortunately.

umeshunni 7y ago

Interestingly, the only recent French tech company to be even remotely globally relevant (Criteo), is also affected. https://en.wikipedia.org/wiki/List_of_companies_of_France https://en.wikipedia.org/wiki/List_of_companies_of_France is a good list to look at. There is only one other software/internet company founded in France since 2000 in the 'Notable' list - 360Learning. About a third of the list was founded before 1900. A very different list than what you'd see in the US.

bojan 7y ago
Sogeti is also very large, founded in 2002.
- umeshunni 7y ago
  Looks like they were acquired by Capgemini
  - user5994461 7y ago
    It's not a tech company. It's a contractor body shop, like Accenture. Sogeti merged very soon after it was formed. It's never really been known as its own company.
gourou 7y ago
France is an ecosystem where smaller (tech) companies get acquired by massive conglomerates (Vivendi, LVMH...). Or more recently like Zenly's acquisition by Snapchat. https://en.wikipedia.org/wiki/Vivendi https://en.wikipedia.org/wiki/Vivendi https://techcrunch.com/2017/06/21/snapchat-buys-zenly/ https://techcrunch.com/2017/06/21/snapchat-buys-zenly/ While there are some French tech unicorns (BlaBlaCar, Criteo, Veepee, Doctolib) a lot of French founders just create their company in the US (Docker, Lending Club, Wit-AI) because the labor code is simpler and there are more VC funds. The current administration is trying to change that with Station F and by making it easier to get foreign workers visas but it's a long shot. https://en.wikipedia.org/wiki/Station_F https://en.wikipedia.org/wiki/Station_F https://visa.lafrenchtech.com/ https://visa.lafrenchtech.com/

r00fus 7y ago

I'd guess it's even more palatable for France if the US threatens. The combativeness from the US helps foreign leaders to look stronger by creating a nationalist confrontation. Is this tax functionally different from tariff?

Xixi 7y ago
Given that French companies are also affected, I fail to see how it could be construed as a tariff. The goal of tariffs is to penalize foreign corporations. That tax is directed at a sector. It will not help the few French actors in that sector become more competitive.
- vuln 7y ago
  There is only one French company affected as another commenter pointed out.
- r00fus 7y ago
  It will create a local market opportunity if FB, etc, pull out. See Austin vs. Uber - the absence of ride-shares launched local alternatives that quickly took that marketshare until the locality changed it's stance. It will likely act much like a tariff as I doubt any of these megacorps will pull out.

pkaye 7y ago

> The French government has argued that such firms headquartered outside the country pay little or no tax. Isn't that largely due to EU laws and the decisions of Ireland and a couple other countries.

99052882514569 7y ago
Let's say it is. Why would that change anything? France's government isn't trying to target or punish anyone (whether Ireland or Google), it just wants to stop the corporate tax avoidance it sees as unfair.
- pkaye 7y ago
  I'm saying if the EU states all worked together on taxation rules none of the tech giants could take advantage of them. Also Google could do a little payback by moving the higher pay jobs from France over to neighboring countries like Germany.
  - luckylion 7y ago
    The EU can't work together on this, because their motives are incompatible. France, Germany want the corporations to pay taxes in France and Germany for the business they do in those countries. Ireland's business is offering a tax cut to the corporations so the corporations don't pay taxes in France or Germany and Ireland get's a cut in return. Ireland has no interest in changing this, obviously.
- buboard 7y ago
  What you call avoidance is the essence of EU. Undoing that would bring us back to pre-EEC situation
  - 99052882514569 7y ago
    Tax avoidance via jurisdictional arbitrage is certainly not the essence of EU.

bko 7y ago

I never understood the logic behind taxing large internet businesses. The idea behind taxes is that you use some public resource and you pay for that service. You own a home in a neighborhood, you pay property tax that funds the schools. You drive a car, you pay gasoline tax that funds the streets. You hire workers locally, you pay the tax to pay back all the contributions public institutions made to adding the skills to the worker. But the idea that a company like Amazon owes some tax to France doesn't make sense. Sure the delivery person uses the roads, but they pay the gasoline tax and the delivery company pays taxes. What public resources did Amazon, a US company, use from France? The other theories of taxation is that it should be used to raise revenue from the best means possible. I disagree with that framework but applying taxes arbitrarily hardly seems fair or the best way to raise revenue. The other argument is that the government should "level the playing field". But again arbitrarily punishing or helping some corporations opens up the possibility of corruption and corporate meddling as corporations look for favors. Much of the edge Amazon has versus local retailers is that it is more efficient. It doesn't take up store space (and pay taxes on the land) and it doesn't have to hire a lot of local workers (and pay taxes on their salaries). It's simply more efficient and its services are appreciated by the consumers.

Vinnl 7y ago
> What public resources did Amazon, a US company, use from France? Digital infrastructure, anti-poverty programs that mean potential customers still have something to spend, financial infrastructure, legislation, ...
- deleted 7y ago
  [deleted]
- tzs 7y ago
  Shouldn't that be covered by the 20% VAT that Amazon pays on goods and services sold to entities in France?
  - bryanlarsen 7y ago
    Is VAT paid when Google shows an American ad to a French person? The tax is on "digital services". It's unclear if the tax is on physical services from digital companies.

deleted 7y ago

[deleted]

buboard 7y ago

I just hope the US does not "retaliate" on this. EU entrepreneurs are too dependent on US businesses.

simion314 7y ago
How, they would also tax big companies "hidden" profits ? Some US citizens are asking for this already, the French tax is not target at a country.
- buboard 7y ago
  They would tax digital companies doing businesses in the US.
  - simion314 7y ago
    Would they exclude US companies doing business in US?
    - buboard 7y ago
      obviously yes. we are in a trade war
      - simion314 7y ago
        This makes no sense, France is not excluding french companies. there is no war , they probably need more money so they found some group to tax, in Romania the government is also in big need of money so they put a tax on telecom companies, should the UK queen get upset now if a UK telecom company that makes business here is taxed more? I mean there are no exceptions or protectionism involved but some politicians can let an opportunity to spread their agenda.
glerk 7y ago
I really wish US companies would take a more forceful approach with these rogue governments. “You get off our back or we pull out of your countries”

ElKrist 7y ago

The US administration is presenting the new tax as if it was specifically targeted to US companies because of their origin. Like a tariff. It is not the case at all. Yes the biggest tech giants that do not pay enough tax are mostly from the US (also other companies from other countries are affected too) But it is not because they are from the US that this new tax is created. It is simply because they don't pay enough tax

fiter 7y ago
I suppose it's just like how the tax law changes in the US were not designed to hurt high-tax liberal states more than low-tax conservative states, but that the high-tax liberal states were just taking advantage of the standard deduction. Unfortunately in these cases, perception is just as important as the nominal reason.
- Nasrudith 7y ago
  How can you tell that they weren't? There are always pretexts and blindly trusting face value explanations for a policy is dangerously naive.
  - fiter 7y ago
    I apologize for not being more clear as I agree with you completely: I cannot tell and neither can I tell about this French tax.
liberte82 7y ago
The US is big into tariffs these days, why do they complain when the same treatment is applied in return?
- harry8 7y ago
  The US loves a cheat. Home town legal decisions are the norm. Gerrymandered electorates are the majority. The american exceptionalism of we can but you can't is openly embraced by all in politics and the media. Regulatory capture is the norm. Revolving door Washington lobbyists is not even a story anymore. Cheating is an absolute way of life nowadays. Which is really, really strange because it seems to me that most Americans really don't like cheats and cheating. Brady.

alt_f4 7y ago

Trump is right on this one -- this measure is definitely anti-competitive and specifically aimed at American tech companies. I hope he is swift to retaliate with appropriate tariffs. Failing to do so will bring a wave of random EU taxes on American tech companies, which will eventually lead to lower profits and engineer salaries.

simion314 7y ago
How, did you forgot how big US is? We are reminded here on HN how big US is, so it is natural that some US companies will also fall into that tax laws. What will Trump do? tax smaller companies so non US ones are hit harder ? Off topic, did the China tariffs had any good side effect so far?
- superkuh 7y ago
  Which China tariffs? The extreme ones China had been using the last few decades or the recent US ones in response to China's longstanding tarriffs?
  - simion314 7y ago
    The ones we read on HN, were there any good consequences so far?
- fiter 7y ago
  Arguably the China tariffs are resulting in manufacturing being distributed to other countries. This could be considered a good side effect from a fault tolerance perspective.
  - simion314 7y ago
    Agree, also China,India and other countries will invest more into reducing their dependencies on US which is as you said good from a fault tolerance perspective
    - 7y ago

dustinmoris 7y ago

Previous discussion: https://news.ycombinator.com/item?id=20409591 https://news.ycombinator.com/item?id=20409591

clamprecht 7y ago
It's interesting to compare the general sentiment of the comments on that post, which was posted 8 hours earlier than this one. Presumably those comments are more from Europeans, and comments in this post are more from people in American time zones.

simplecomplex 7y ago

Instead of taxing companies because it’s an easy method to steal money, maybe France should focus on enabling their people to create a company like Amazon or Facebook and actually generate wealth instead of taking it?

alt_f4 7y ago
too hard
effie 7y ago
Why wouldn't they do both? "Stealing" money via taxation is a legal and logical way to get some money to support their other operations, perhaps even "enabling their people".

csomar 7y ago

This is a stupid move. The tax is not payed by big tech giants. Not by both, either. It's complicated and depends on who needs whom the more. If there are no alternative to AWS, Google Adsense, or an American SaaS in France; the French people will be paying all of the tax. The big tech giants will just slap them with a 3% surcharge for being in France. This is different from US-China tariffs. If the US can source from other suppliers, the Chinese will need to lower their prices. Effectively making them pay the tax. It is a complicated and messy situation. The big tech giants are named that way because they are big and dominant. This makes them able to make the rules and circumvent the current ones. You'll need the whole EU (or maybe the EU/USA) to get them in line. France has been digging its own graveyard for a while. It seems that they didn't learn their lessons and now going full speed. If you are a French startup, you'll be less competitive. People hate paying more and it's not clear if they can deduct this tax (like VAT).

toomuchtodo 7y ago
This would incentivize competitors in France. That’s a good thing for France.
- icebraining 7y ago
  From what I can tell, it will incentivize competitors everywhere, as long as they don't have revenues over €750M.
  - luckylion 7y ago
    Which is a good thing, too, as it incentivizes decentralization.
- cyrksoft 7y ago
  With that argument, protectionism will incentivise competition. So why don’t we close the economy a bit?
  - toomuchtodo 7y ago

pbalau 7y ago

Who is this going to affect? The business: 1) between Facebook/Google and advertisers based in France? 2) between Facebook/Google and any advertiser as long as the ads are shown to people in France? 3) between Facebook/Google and any advertiser as long as the ads are shown to French people? If it is the first, then I don't really see a problem. FB and co can either stop doing business directly with French advertisers, or eat the tax, or increase the prices. If any of the others, then how would one go about determining how much money to pay without infringing on people's privacy? What would stop FB from either declaring a token amount of "business done in France - as per the options 2 and 3" or even say no business happened? How would the French gov check that? Get the list with all ads shown by FB over a month along with who they showed the ad to so the gov can check if those people where in France or not?

baud147258 7y ago
> Get the list with all ads shown by FB over a month along with who they showed the ad to so the gov can check if those people where in France or not? I think it would be closer to checking which French company bought ads from Facebook and for how much and taxing this.
- pbalau 7y ago
  This is the case no 1 in my post. What you quoted refers to points 2 and 3.
  - baud147258 7y ago
    Sorry, I misread your post. I think that the tax don't apply for points 2 & 3, since it only concerns revenus made in France.

dahdum 7y ago

This tax is on sales and not profits, so won't it just become another line on the bill for French consumers? I imagine they'll just break it separately from VAT. Retroactively they'll have to eat the cost though.

bagacrap 7y ago
Yes, but only for larger tech firms, so this will somewhat level the playing field between large and small companies (offsetting the economies of scale that larger firms benefit from). This would hypothetically lead to greater consumer choice, which is probably a good thing.

wazoox 7y ago

The US has long been using their legal system to skew free market rules and favour their domestic markets and companies. DoJ is constantly "exporting" US law around the world by methods that border blackmail or even sometimes taking hostages. Fighting back has been long due. Though of course France should begin with EU free-riders, Luxembourg and Ireland...

pas 7y ago
> DoJ is constantly "exporting" US law [...] Could you explain what do you mean by this, and provide specific instances?
- wazoox 7y ago
  For instance the 1977 (79?) law against corruption of foreign officials has been in almost all cases involving large companies, only been used against foreign ones, except in once case, Halliburton. In fact in that very case Valourec (French) was working on a common contract with Halliburton and was attacked first, but they negotiated by implicating their partner (both were punished). Concerning US embargoes, the DoJ has extorted many billion dollars from foreign companies for breaking these. However there was no embargo between, say, Germany and Iran; as some transactions happened to be in USD, DoJ consider that Deutsche Bank, by providing services priced in US$ to Iran, violated the US embargo. Ditto other European banks. This looks like blackmail: US Treasury grabbed more than USD 14 billions from European banks using this tactic. Also the US blocked various arms sales between various countries because the weapons used some US-made parts (typically some electronic chip deep inside), only to keep the deal to themselves. Basically that means that any company making transactions in US$ must comply to US law, always and everywhere. If my company sold some product to some Russian company with a price in USD, it could be sued by a US prosecutor. Then when visiting a friend in the US, I could be jailed (even if I hadn't no direct relation with the targeted sale, simply as a company board member or manager). If my product includes any US-made part, my international sales are depending upon US goodwill. Which, in the case of billion-dollars contracts, will probably enter the scene. Seems preposterous? It actually happened many times. It happened to the VP Asia of Alstom, jailed nearly 4 years in the US to blackmail his company for the sole benefit of General Electric. One of Deutsche Bank VP was extradited from Croatia to the US while on holidays, and jailed in a high security prison like a murderer. Etc.

cyrksoft 7y ago

Aren't they already taxed in Ireland, another EU country? Isn't this double taxation?

effie 7y ago
Yes, France wants money too. Not unreasonable, considering the companies' activities involve French infrastructure and French citizens.

ezoe 7y ago

What happened to a company who has no physical presence in France refuse to pay the tax on the ground that France has no jurisdiction upon them? Ordering French ISPs to block the web service of that company thereby breaking the fundamental human right of freedom of speech and no censorship.

liberte82 7y ago
Blocking a website is not “breaking the fundamental human right of freedom of speech and no censorship”, at least not in France.
Someone1234 7y ago
If they have French customers, the French government has jurisdiction. If they don't have French customers, the French government blocking them would have no impact.
pmohun 7y ago
I'm not sure the assumption that other countries give a damn about what the U.S. Constitution says is correct.
baud147258 7y ago
France is already censoring Internet. https://en.wikipedia.org/wiki/Internet_censorship_in_France https://en.wikipedia.org/wiki/Internet_censorship_in_France
WaylonKenning 7y ago
I'm not sure that fundamental right is correct, at least, outside of America. There's no fundamental human rights of freedom of speech and no censorship in New Zealand for example, as enshrined by law.
- alkonaut 7y ago
  There are no freedom of speech laws that would apply to a corporation rather than a human, that I know of at least.

deleted 7y ago

[deleted]

sarcasmOrTears 7y ago

Taxes are never fair, that's why you'll never agree on them. It's a game of coercion and the only thing that can be done is choose who's the sucker that's gonna pay. Taxing big, multi-national companies is something that I can live with, strangely. I know it's wrong, but still less wrong than having poor/middle-class directly pay the bill. In the end they have the money to pay tax consultants and the money to deal with it.

yeahitslikethat 7y ago

Why aren't services, of any sort, taxed in the USA? We don't tax legal services or doctor visits. None of them. But we tax groceries. Incredibly regressive.

opportune 7y ago

Part of me originally wanted the US to retaliate since this theoretically threatens my paycheck, but a 3% tax on revenue generated within the country is pretty low and seems reasonable considering how ineffective taxing profits is due to loopholes. I really don't think it's sour grapes so much as trying to address the Irish/Luxembourgish tax schemes

charlesdm 7y ago
Correct in theory. But have you looked at french tax policy? The issue with new taxes is that often it starts at 3%, then goes up gradually to 5, then to 7, and before you know it you have a 15% turnover tax. France is a lovely country, but one of the worst players when it comes to tax policy. The never ending appetite to increase the spending of the state does not stop...
- hmartiniano 7y ago
  Which is actually a good idea: increase tax on revenues for companies using tax-evasion schemes until it is no longuer profitable for them to continue doing so. Also, consider the fact that tax evasion is a crime in most countries and that this is a very bland measure when compared to what these companies (and their executives) really reserve.
  - eurg 7y ago
    increasing taxes makes tax-reduction-strategies _more_ profitable, not less also, tax-evasion and tax-reduction are two different things, equating them is an argument in bad faith
    - opportune 7y ago
      >tax-evasion and tax-reduction are two different things, equating them is an argument in bad faith I beg to differ, the only difference is that one is by definition illegal and the other is by definition legal. Tax reduction can mean chasing tax incentives responsibly, which is fine, but can also mean deliberately engaging in weird financial engineering that violates the spirit of the law but not the letter. Like if I max my 401k and HSA, get a $600k mortgage to max out the mortgage interest deduction, and count all my professional electronics as business expenses I am reducing my taxes but I am following the spirit of the law because I am reducing my tax burden by making decisions that tax policy is meant to encourage. If I incorporate in the Cayman islands and declare all my income through a Virgin Islands subsidiary operating through Panamanian bank accounts so that I can sell off shares of my business to a trust which I also own, all so I can turn personal income into capital gains earned in a different country even though I do my actual business and live in the US, I would definitely be violating the spirit of the law.

maitredusoi 7y ago

Amusing to read political comments on HN ... It is like discussion about programming laguages, just church wars ....

bfrog 7y ago

Please do this in the US, and use the money to fund the green new deal.

whb07 7y ago

Absent all this talk about fairness or not, if one were watching CNBC today, Cramer and the other analysts were asking themselves "what exactly is France selling to the U.S" and this is the list they came up with: 1. cheese 2. wine 3. .... After a couple minutes on the discussion, they came up with Airbus (not strictly French and made outside of France).

julienfr112 7y ago

There may be a complication : As EU is a single market, US retaliation (except maybe on Champagne and Camembert ...) cannot be targeted on France but on the whole EU. For example, Airbus headquarter is located in the Nederland, and has factories all over Europe. As such, EU will have to enter a fight a single country started. I really wonder what will happen next. Maybe Texas could raise the tax on red sole shoes https://www.google.com/search?q=red+sole+shoes https://www.google.com/search?q=red+sole+shoes ?

_zachs 7y ago

Amazon should and probably will just raise prices for French shoppers.

Hithredin 7y ago

Very interesting comments that reflects the difference of values between french and north americans!

alwayseasy 7y ago

European regulations and taxes always come up in these threads and some libertarians complain about how it's an unfair way to treat a digital company that shouldn't pay taxes. Just remember that the United States are subsidizing tech companies (tax amnesties) and all the upside (high salaries, innovation, stock market growth etc...) is going back to the US while the downside of tech companies (electoral manipulation, teen depression, tax avoidance, privacy breaches) is only felt in Europe with no upside.

bacon_waffle 7y ago
In addition, the United States is exporting its tax system around the world and imposing costs on the rest of the world in the process via FATCA and FBAR.

rdm_blackhole 7y ago

As much as I support governments cracking down on companies trying to dodge paying taxes, I can't help but feel like this is just for show. Since the yellow vests protests started last year(yes, they are still happening, although the number of protesters has been decreasing rapidly), the French government has been under pressure to stop taxing the middle class and go after other entities/individuals to raise money. It is no secret that France and most of the developed world is technically broke. With a debt to GDP ratio approaching 100%, the French leaders have to find money quickly or the whole welfare state will come to an end sooner than later. Considering the fact that this tax is supposed to bring in 400m per year, it is basically a drop in the ocean. But, what will happen is that Macron will spin it as a success and will tell people: "See we are taxing the bad guys." In the meantime, he will keep on increasing the taxes on the middle class covertly. The problem is that in a normal functioning democracy, the proceed of the taxes is used to increase the well being of the population. In France though, all new taxes raised are not used to create or maintain infrastructure or even subsidize basic services for its citizens. Most of the proceeds are actually used to pay off the debt. See the carbon tax from last year when the government admitted that only 50% would be allocated to actually fight climate change and the rest would be used for some other unrelated things. France as a whole has never been more taxed than now, and yet public services and public infrastructure(or whatever is left of it, after they nearly sold everything to private corporations) is falling into disarray. Emergency rooms are closing(They have been on strike for the last 3 months now), social services have been cut back, roads on the countryside are full of potholes, electricity/gas prices keep on increasing. The middle class is being bled dry by an overzealous state that does not know what to do anymore to fix the problems it created in the first place. For the last 30 years politicians from all sides of the political spectrum have done one thing and one thing only. Instead of reforming, they just tax, tax and tax more. Until there nothing left. That's why France is dying. That's why people like me who do not like what France has become have left to create companies/ pay taxes somewhere where I don't feel like I have to share 50% of my money with a state that provides very little to me.

vansteen 7y ago

Btw, on a tax manner, are these companies really American?

jplayer01 7y ago

This entire thread shows how much of a waste of time it is discussing taxes or government or social services (socialism!) or markets with Americans. They have such an incredibly skewed point of view based on an insanely unfair and unjust system of everything in the US.

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