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France aims for US digital tax deal by late August, despite Trump opposition

France wants to reach a deal with the US on taxing tech giants by a G7 meeting in late August, Economy Minister Bruno Le Maire said Saturday.

Published: 28 July 2019 08:44 CEST
France aims for US digital tax deal by late August, despite Trump opposition
French Economy Minister Bruno Le Maire. Photo: AFP

He was responding to US President Donald Trump, who on Friday vowed “substantial” retaliation against France for a law passed this month on taxing digital companies even if their headquarters are elsewhere.

The law would affect US-based global giants like Google, Apple, Facebook and Amazon, among others.

Trump denounced French President Emmanuel Macron's “foolishness”, though they discussed the issue by phone on Friday, according to the White House.

Macron confirmed that he had a “long” conversation with Trump, stressing the pair would “continue to work together in view of the G7”.

“We will discuss international taxation, trade and collective security”, he said Saturday.

His office earlier said Macron had told Trump that the tax on the tech giants was not just in France's interest but was something they both had a stake in.

Neither side revealed if they had also discussed Trump's threat to tax French wines in retaliation.

Le Maire took the same line at a news conference Saturday: “We wish to work closely with our American friends on a universal tax on digital activities.

“We hope between now and the end of August — the G7 heads of state meeting in Biarritz — to reach an agreement.”

Leaders of the Group of Seven highly industrialised countries are to meet in the southwestern French city on August 24-26.

Le Maire emphasised that “there is no desire to specifically target American companies,” since the three-percent tax would be levied on revenues generated from services to French consumers by all of the world's largest tech firms, including Chinese and European ones. 

But Deputy White House spokesman Judd Deere noted earlier that France's digital services tax was already the subject of an investigation at the US Trade Representative's office, potentially opening the door to economic sanctions.

“The Trump administration has consistently stated that it will not sit idly by and tolerate discrimination against US-based firms,” Deere said in a statement. 

The French law aims to plug a taxation gap that has seen some internet heavyweights paying next to nothing in European countries where they make huge profits, because their legal base is in smaller EU states.

France has said it would withdraw the tax if an international agreement was reached, and Paris hopes to include all OECD countries by the end of 2020.

The Organisation for Economic Co-operation and Development is a Paris-based forum that advises the world's advanced economies.

READ ALSO: 'I like the way they look': Teetotaler Trump prefers US wine to French

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Published: 30 October 2023 15:21 CET
Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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