France to Battle Piracy with Taxes

January 11, 2010 Taxation in EUTaxation in France

BarcampParis7The French Government could soon begin to tax online advertising revenues to subsidize upkeep of the country’s cultural heritage and initiatives to reduce piracy.

The French Cultural Ministry has published a report suggesting a new tax on the online advertising revenues of companies established in the European Union, generated from the use of their services in France. The report, which was published in early January, recommends that a tax of no more than 2 percent be installed, and estimates that government revenues of up to €20 million could be garnered annually. Online internet giant Google will be one the hardest hit by the proposal, with an annual advertising revenues £720 million in France, leading to many dubbing the idea as the “Google tax”.

On January 9th French President Nicolas Sarkozy voiced his support of the proposal and called on Christine Lagarde, Minister for the Economy, Industry and Employment, to begin investigation into the viability of the tax.

The tax suggestion has been met with criticisms from its namesake company, Google. Olivier Esper, Senior Policy Manager for Google France, commenting on the proposed tax, said “…we don’t think introducing an additional tax on internet advertising is the right way forward as it could slow down innovation,” and “…the better way to support content creation is to find new business models that help consumers find great content and rewards artists and publishers for their work”.

The report included a total of 22 suggestions. Amongst these was an increase to taxes on Internet Service Providers, with collections being used to fund a subsidized online youth music download program, aimed at encouraging users away from illegal downloads. The digitization of books, creation of online information portals, and reduction of taxes on online cultural sales were all also discussed within the report.

Photo by musigny