France and Spain: Google will pass on the “Gafa” tax on the prices of its advertisements

In response to the “Gafa” tax imposed by these two countries, Google is increasing by 2% the price of the advertisements displayed there on its platform.

Google has warned advertisers this week that it intends to increase by 2%, from May, the price of advertisements broadcast on its platform in France and Spain to offset the cost of the so-called “Gafa” tax applied in France since 2019 and since this year in Spain.

This increase must “cover part of the costs related to compliance with tax legislation on digital services in France and Spain“, Google explained to advertisers in an email consulted by AFP, confirming information from the Mouthe.

France had adopted in July 2019 a tax of 3% on the turnover of digital giants exceeding 750 million euros of global activity. In Spain, the government definitively approved at the beginning of October the creation of a 3% tax on the income generated by certain activities of the digital giants.

«We regret this decision, which will reduce the ability of brands to invest at a time when all companies are going through an unprecedented crisis.», Reacted to AFP the director general of the Union of brands Jean-Luc Chetrit.

“Taxes on digital services complicate efforts to achieve a balanced deal that works for all countries. (…) We encourage these governments to go back on what is essentially customs duties, or at least to suspend them as long as the negotiations continue, ”argued Karan Bhatia, head of public policies at Google at the end of February.

Before Google, the internet search giant which, along with Facebook, dominates the advertising market, the e-commerce leader Amazon had implemented in October 2019 a 3% increase in the prices applied to French sellers on its platform.

Apple followed suit in September 2020, by increasing the commissions levied on developers who sell applications on its platform, in France but also in Italy and the United Kingdom.

Facebook told AFP that it had no plans to charge extra for French and Spanish advertisers at this stage, and hoped that new tax rules would culminate in international discussions.

By adopting a “Gafa” tax in 2019, France had positioned itself as a pioneer country in the taxation of “Blunder(Acronym for Google, Amazon, Facebook and Apple) whose taxes are often unrelated to the amount of their profits and who were the big winners in 2020 from the Covid-19 pandemic.

This “Gafa” tax brought in around 400 million euros in 2019 in France and was levied again in 2020, despite threats of reprisals from the Trump administration, which had also thwarted negotiations within the framework of the OECD. to reform the international taxation of these companies.

But the election of US President Joe Biden in January changed the game and the OECD is now counting on an agreement on the taxation of multinationals at the G20 Finance on July 9 and 10.