Constitutional Court in France Validates Digital Services Tax

The DST applies to resident and non-resident companies with a worldwide turnover (at a consolidated level) exceeding EUR 750 million and a French turnover exceeding EUR 25 million. It is based on the French-source turnover derived from certain online services. The rate of the tax is 3%.

The Constitutional Court rejected all criticisms expressed by taxpayers. In particular, the Court provided the following clarifications:

• scope of the tax: the different treatment between taxable and non-taxable services is justified by the purpose of the tax, which is to apply to online services the value of which essentially derives from the users' activity (e.g. targeted advertising);
• taxation thresholds: the criteria used by the law are objective and in line with the purpose of the tax, which is to apply to online businesses with a high digital footprint in France and worldwide;
• territoriality rules: the fact that the tax is based on a percentage of users localized in France is in line with the purpose of the tax, irrespective of the fact that the value of the service might be partly created out of France;
• taxation rules applicable to 2019: the percentage of French users in 2019 could be calculated on a 5-month period following the introduction of the tax to ensure that taxpayers had the relevant data; and
• tax rate: the 3% tax rate is not excessive and the absence of progressivity of the tax is not contrary to constitutional principles. It is irrelevant whether the online services are also subject to corporate income tax, as the DST is based on turnover and not profits.

Decision no. 2025-1157 QPC was published on 12 September 2025. It is available here (in French only).

Report from our correspondent, Pierre Burg. Follow our reporting on this via our Tax News Service (subscribers only).