France plans internet tax of 5.5 cents per gigabyte

Internet content providers would have to pay a fee based on the amount of data they deliver over the internet to end users in France. A proposal submitted by the French Socialist Party (Parti socialiste, PS) in France’s National Assembly is currently sparking debate.

The idea behind the planned new tax is that companies that host content on their servers for users to access over the French web would have to pay the tax. The rate would be 5.5 cents per gigabyte delivered to end users in France. Large tech companies would pay most of the tax, as the PS says they account for a substantial share of internet traffic in France. The French Socialists cite data from French telecom regulator ARCEP in their proposal, according to which Google, Meta, Amazon, Netflix and cloud provider Akamai account for half of France’s internet traffic. ARCEP estimates that 200 billion gigabytes of data travel each year over the infrastructure of French internet providers. The new tax would be capped at 2% of a content provider’s total revenue, or 15% of its revenue generated in France. It is worth noting that the proposal explicitly refers to revenue, not profit. The Socialists argue that such a tax could bring about €10 billion into France’s treasury.

Internet providers would help collect the tax

Internet providers would play a central role under the plan. They would have to collect anonymized data on internet traffic so each affected company could be taxed correctly. The proposal’s sponsors see no data privacy concerns. They say the content of the data would never be examined, nor would any personal information, such as data about subscribers to content services. Only the amount of data would be recorded. Still, some users may object to their connection data potentially ending up in logs for the French tax authorities. The proposal’s sponsors do not explain exactly what the stored data would look like.

If a company uses a content delivery network (CDN) to cache content close to end users — for example, a streaming provider seeking to give customers the best possible connection — the amount of data delivered by the CDN would be treated as the amount of taxable data.

The proposal does not distinguish between companies based on size, even though such a distinction is explicitly made, for example, in the EU-wide “Digital Services Act” (DSA). Under the law, a “very large online platform” (VLOP) is one used by an average of 45 million EU residents per month. That amounts to 10% of the people in the European Union. However, the VLOP designation applies only to EU regulation, not regulation by individual member states.

VideoLAN strongly opposes the plan

The goal of the new tax is to make global players in the digital economy pay more. The proposal’s sponsors argue that the current tax system gives these companies substantial advantages over other sectors of the economy. However, the proposal does not specify which companies would be subject to the new fee. Although it refers to global digital companies and major players such as Meta and Amazon, it does not identify the business models it is targeting. In theory, any company with one or more IP addresses that offers content for users to access online could be affected.

Some companies already see themselves as affected by the possible new tax and are pushing back. VideoLAN has already issued scathing criticism of the French Socialists’ proposal. The nonprofit organization is behind the well-known free VLC media player, the widely used x264 video codec, and various other video codecs and software libraries. VideoLAN says the new tax would cost it more than €1 million a year. The company does not explain how it arrived at that figure. It would mean, however, that VideoLAN would have to pay tax on around 18 million gigabytes of French internet traffic. In addition to VLC client downloads, this could include data associated with VideoLAN’s video codecs and software libraries.

VideoLAN says it faces significant challenges in bearing the potential new tax burden. The organization accuses the politicians who voted for the proposal on X of having no understanding of their own idea. A French Socialist politician counters that VideoLAN would not be affected by the new tax at all. This highlights the proposal’s ambiguities: It clearly states its goal of taxing major players in the global digital economy, but does not specify which companies and business models it targets, leaving many organizations potentially in scope. VideoLAN now sees itself in the proposal’s crosshairs, too.

But the proposal still has a long way to go before it becomes law. It is an amendment to France’s 2027 budget bill. In the first reading, Parliament has now voted to adopt it. That puts the proposed tax in the first part of the budget bill currently under consideration. Parliament will vote on that part on Nov. 3, then vote on the second part and the full budget on Nov. 17. The proposal can still be amended or dropped during this process.

(nen)