Une feuille de route pour une fiscalité numérique neutre et équitable
Prior to February 14, 2012 no really operational proposal had been made either by the Government or by professionals, apart from Mr. Philippe Marini's proposals (online advertising tax and Tascoé). However two initiatives can be cited:
The Institut Montaigne proposed taxing foreign companies for corporation tax on sales realized in France from their servers based in France without the presence of personnel in France being a factor for consideration. However, as servers are located worldwide, this proposal is already obsolete.
The CNNum proposed creating the status of a stable virtual site in Europe. This deserves a Europewide debate but its timeframe is far too long, even though it should not be neglected.
Thus, on Mr. Philippe Marini's request, the attendees at the Digital Taxation Forum on February 14 2012 presented a set of proposals which firstly call for new taxation and collection procedures and secondly, case law solutions or the international renegotiation of the law in force.
The attendees presented numerous proposals, each non-exclusive of the others, which could be incorporated into a new bill.
The taxation representation of non-resident Internet players in France above certain business revenue thresholds. The purpose of this collection procedure is to identify taxpayers, either from their registration at the tax office for non-residents or by the use of a taxation representative based on the procedure used for VAT (a standard procedure for companies established in and outside the EU). The legal framework to approve online betting sites operating in France is a precedent for managing the activity of other websites, and demonstrates the operational nature of this. However differently from the preliminary approval procedure which is specific to online betting sites for reasons of public policy, which only concerns a small number of websites, there are potentially a very large number of players in online advertising, e-commerce and other services, which would only be covered by a declarative obligation, and a subsequent tax control. In the light of the case law of the ECJ which prohibits the general nature of a tax representation obligation (May 5 2011 - C - 267/09 Commission v. Portugal) «in the Commission's view the obligation to appoint a taxation representative is contrary to the free circulation of persons and capital because it is both discriminatory and disproportionate with regards to the purpose of ensuring the effectiveness of the tax control and combating tax evasion», a declarative procedure must be proposed which is neither discriminatory nor disproportional and therefore compatible with community law. The pathway is therefore narrow, with several other technical issues along it. Firstly the taxation base (the total amount of online advertising expenditure or the advertising agency's commission); by analogy with the taxation of online betting (tax on the bets and not commission) and in order to be compatible with the OECD's standards, all advertising expenditure should be taxed. Secondly, setting the threshold of liability for taxation to only impact the large national and international players and not SMEs or private individuals. The same questions will be repeated for each category of taxation subject to the collection procedure.
a) Certain telecom operators have proposed extending taxes paid by French players to foreign Internet players
For instance, this applies to the COSIP67(*) tax which is paid by telecom operators to support the programme industries (support for the public audiovisual industry of over €200 million) and the private copy royalty paid to beneficiaries (currently paid by purchasers of CDs, DVDs and hard disks and by the operators) of over €180 million per year. However this proposal raises more problems than it solves because taxable activities, taxable thresholds and rates of taxation must be decided in detail as well as whether this tax should apply to data storage and cloud computing activities (a question on which the operators are in disagreement and on which no concrete solutions have been proposed). Finally, the enlargement of the taxable bases could permit a reduction in rates, subject to revenue simulations. However, shouldn't a more indepth reform of the existing framework be under consideration (clarify the method of paying writers, and the role of collecting societies, extending the perimeter of television services to new video on Internet technologies) ?
The return of the online advertising tax «second version» is by analogy with the audiovisual advertising tax paid by the advertising sales agencies, where the tax payer would no longer be the advertiser but the advertising agency irrespective of the country where it is based. The taxable base would be the total advertising expenditure paid to the support (and not the amount of the advertising agency's commission) and at a rate of 1% of €2.6 billion of online advertising would represent 26 million euros. The threshold would have to be fixed to give priority to taxing the market's large players and not SMEs or private individuals, and a scale could be introduced depending on the activities concerned (the search where Google represents 90% of the market or display which is shared between more than 100 players). More than a revenue measure, this is symbolic measure of taxation fairness.
The following proposals are aimed at taxing the creation of value which certain foreign groups derive from operating on the French e-commerce market (Amazon Apple) or from network activities (YouTube, Facebook, Twitter etc)
The e-commerce services tax (Tascoé) by analogy with the tax on selling surface areas (Tascom), owed by physical stores. The taxpayer would be the e-commerce site based in France or abroad and at a rate of 0.1% to 0.5% of the amount of B to B transactions valued at €100 billion, the tax revenue would be between €100 to €500 million (a taxation threshold would enable the large players and not SMEs and private individuals be targeted).
Another proposal would be similar to a levy on the digital added value (Contribution sur la valeur ajoutée numérique - CVAN) by analogy to the levy on the added value of companies (Contribution sur la valeur ajoutée des entreprises - CVAE) levied on the physical persons and companies who operate in France. Thus, a site based abroad which is not liable for CVAE but which realizes turnover on the French market would be targeted. However, the taxable activities, and the method of calculating the added value would have to be defined (a difficult debate because which supports will enable wealth creation to be measured? Flows? Click? IP addresses?) and apply a declarative procedure for turnover where problems of deductibility of charges and transfer pricing would arise. However this does have the merit of not stigmatizing a specific activity but developing a discourse on the principle of taxation fairness irrespective of the technological wealth vector.
Finally a last proposal, a digital grant in the form of an access right to network infrastructures appears to be an attractive procedure but needs to be examined more precisely (taxpayers being foreign Internet players who operate on the territory to supply services which compete with services which are already offered by the telecom operators based in France such as e-mail, VOD, telephoning, access to content etc) because the payment of a tax giving the right to access the national network would be an infringement of the free circulation of services inside the European Union.
Two approaches are suggested by the National Digital Council:
- In the short term, the profits of foreign digital players should be taxed on the «complete commercial cycle» basis, a notion derived from case law which requires a judgment (the case law of the EC allowing certain profits to be connected to France although there is no independent site or representatives must be scrutinized with respect to digital services).
- In the long term this would involve working at the community level to adopt a rule creating a virtual stable site assessable for corporation tax
Although these proposals should be supported it must be stressed that they do not figure in the legislative domain in the short or medium term.
* 67 Compte de soutien à l'industrie des programmes audiovisuels (audiovisual industry fund).