Amazon or Facebook are just two of the big tech companies that have received a notice from the French tax authorities. The reason is a new specific tax for these large companies that arises, in part, as a response to the tariffs that the United States has imposed on certain French-made products.

The origin of these tax tensions has to do with the trade war waged by the administration of President Trump . As a response from some countries of the European Union, a commercial response began months ago based on announcements of the introduction of new taxes. The objective is to balance the difference between the income that large technology multinationals generate in national territories and the low taxes they pay there. With «intra-community tax havens» such as Ireland, companies such as Amazon, Apple, Facebook, Google … set up their community headquarters in that country , benefiting from low taxes.

Tax vs. Tax

The US Treasury plans to impose a 25% tax on exports of handbags and cosmetic products from France, an industry worth more than 1.3 billion dollars, in addition to threatening to tax cheese exports and champagne with 100% tax (we repeat, 100%).

In response, the objective of the ministries of Finance of the EU countries with this tax threat from the United States in the making falls on the most widely used services: technology. The vast majority of North American multinationals in this sector and the hundreds of millions of users of their services in community territory make them the perfect target, added to the previously mentioned circumstance of low taxation.

The truth is that since the beginning of the year there has been a negotiation between the French and US tax authorities that does not seem to have led to a very optimistic conclusion for technology companies. In June, the US government suspended the talks on this matter that were taking place within the framework of the OECD (Organization for Cooperation and Development in Europe) and no agreement was expected to be reached until 2021.

Bargaining pressure

Given that in this institutional framework the dialogue has been interrupted, France tries to take advantage of the change of government to push the president-elect, Joe Biden, to adopt a more flexible position on tariff matters. As a method of negotiation against an opponent who until now had not been very inclined to transfers, the French trump card is the notice to the technology multinationals of an additional tax .

France is the EU country that has a more “aggressive” fiscal policy in response to taxes than from across the pond, but it is not the only one. And not only countries integrated into the EU, even the United Kingdom (in the process of Brexit) also has its own tax response planned.