France gives ground to US on digital tax
French and US negotiators have reached a compromise agreement on France's digital tax, a levy which prompted president Donald Trump to threaten a separate tax on French wine imports, a source close to the talks said.
The compromise, struck between French finance minister Bruno Le Maire, US treasury secretary Steven Mnuchin and Mr Trump's White House economic adviser Larry Kudlow, envisages that France would repay to companies the difference between a French tax and a planned mechanism being drawn up by the OECD.
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The draft agreement was to be submitted to Mr Trump and French president Emmanuel Macron yesterday at a G7 leaders summit in Biarritz.
"Mr Trump's adviser is OK with the proposal," the source told Reuters. "That would be the mechanism at this stage, that's the joint proposal."
France's 3pc levy applies to revenue from digital services earned by firms with more than €25m in French revenue and €750m worldwide.
United States officials complained it unfairly targets US firms like Facebook, Google and Amazon. They are currently able to book profits in low-tax countries like Ireland and Luxembourg, no matter where the revenue originates.
France's Mr Le Maire and his US counterparts worked on finding a deal all weekend, first at the French finance minister's family house in the Basque countryside and later at a Sunday dinner in a Biarritz restaurant, the source said.
The row has been threatening to open up a new front in the trade spat between Washington and the European Union, as economic relations have appeared to sour.