On 10 July 2019 the Office of the U.S. Trade Representative (USTR) initiated an investigation pursuant to Section 301 of the Trade Act of 1974 into France's digital services tax (DST) to determine whether the tax is discriminatory or unreasonable and burdens or restricts United States commerce. Following an affirmative finding by USTR, the United States may take unilateral actions against imports of goods and services from France (including the imposition of a tariff or quota) or may initiate World Trade Organization (WTO) dispute settlement proceedings, among other actions.


The French Parliament passed the DST in early July, and the law was published in the French Offical Journal on 25 July 2019. The DST is a three-percent tax on revenues derived from two categories of digital services: (1) digital interface services that allow users to contact and interact with other users, notably with a view to supplying goods or services between those users, and (2) digital advertising services that enable advertisers to place targeted advertising on a digital interface.

Companies will be subject to the DST if they meet the following criteria: (1) engage in one of the digital services identified above; (2) have at least €750 million in global gross revenues from the activities; and (3) have at least €25 million in gross revenues generated from the activities in France. France's Finance Minister Bruno Le Maire has stated that approximately 30 companies will meet these criteria. Most of these companies are U.S. firms.

The tax would apply retroactively, beginning 1 January 2019.

Section 301 investigation process

The Trump administration has undertaken several unilateral measures to correct allegedly unlawful international trade actions by U.S. trading partners. For example, pursuant to Section 301, USTR has imposed 25 percent ad valorem tariffs on hundreds of billions of dollars of U.S. imports from China.

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