france to tax google – issue of advertising market revenues crossing global border

Posted on January 9, 2010

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this isnt a new story. when ecommerce first emerged the question of where does an entity legally reside came up not just from a tax perspective but from a freedom of speech perspective.

one thing is certain, to try and change the way the people use the internet and restrict browsing to “your country” isnt going to work. to charge international companies tax because their customers came from your country is a bit more likely as we have it now in customs duties. a sales tax for french citizens buying advertising on a google could make sense, as that is a sale and thus a sales tax (or VAT) would apply, but this would require a broader tax change for all digital services bought or sold internationally, be difificult to implement and become a major hurdle to small etailers as they would be required to manage very complex international sales tax laws to ensure they were paying the right amounts to the right country.

the challenge arises when there hasnt been a sale, the person has just viewed your website or used your search engine? there are too many variables to make this likely (i.e. a french person has browsed an american site with american advertisers).

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