France's Constitutional Council will rule on September 12, 2025, on constitutional challenges to the country's 3% digital services tax (DST) following referrals from the Council of State involving Digital Classifieds France and Airbnb Inc.
Constitutional Challenge
The challenges center on alleged violations of constitutional equality principles under Articles 6 and 13 of the Declaration of the Rights of Man and of the Citizen. Digital Classifieds France argues the DST creates unjustified inequalities between taxpayers subject to corporate income tax in France and those that are not, and between companies providing similar services on digital versus non-digital platforms.
Additional arguments include that the DST's territorial rules based on a national presence coefficient lack objectivity, that group-level threshold assessments create disparities between standalone companies and group entities, and that enforcement difficulties against foreign operators create unequal treatment based on establishment location.
Tax Structure
The DST applies at 3% to revenues from targeted advertising, user data sales, and digital intermediary services. Companies must exceed global revenues of €750 million and French revenues of €25 million to qualify. The tax applies to revenues generated in France through specific digital activities, calculated using territorial allocation coefficients.
For 2019, the territorial coefficient was assessed only for the period between the law's publication and December 31, 2019, creating specific calculation challenges that form part of the constitutional complaint.
Context
The case represents the first major constitutional test of France's DST since its 2019 introduction. France has faced criticism from the United States over the tax's alleged discrimination against American technology companies, while international negotiations through the OECD on global digital taxation rules remain incomplete. The Constitutional Council's decision could affect the viability of unilateral digital services taxes across Europe as countries await a global solution.
