France Upholds Digital Services Tax in Landmark Ruling

September 20, 2025

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On September 12, 2025, the French Constitutional Court issued a decision in one of the most significant cases concerning the imposition and application of the Digital Services Tax (DST) on domestic and international digital companies. Considering the potential broader impact of this case on the implementation of the DST in other EU countries, the Constitutional Court's decision has much greater importance than the mere application of the rules within France.

The Impact of the Constitutional Court Decision

The French Constitutional Court upheld the application of the DST and rejected the challenge brought by Digital Classifieds France. More precisely, the Court confirmed that the DST does not violate the constitutional principles of equality before the law or equality in public burdens.

The Court upheld the validity of the relevant Articles of the French Tax Code, concluding that the tax’s design, including its group-level thresholds, the territoriality rules based on the national presence coefficient, and the exclusion of certain services from the scope of the tax, was sufficiently justified and proportionate.

As a direct consequence of this ruling, the DST remains enforceable, and in-scope taxable persons must continue to comply with its requirements. Additionally, companies that have already paid the DST can no longer seek refunds on constitutional grounds, and the decision provides a more substantial degree of legal certainty around the French DST regime. Furthermore, the decision reduces the likelihood of further constitutional challenges and may enhance the legitimacy of similar unilateral digital taxes introduced by other EU countries.

Conclusion

The decision marks a significant victory for France and the lawmakers, ensuring that this highly controversial tax, at least from the perspective of the digital companies, primarily American tech giants such as Google, Apple, Facebook, and Amazon, remains in effect. Moreover, the outcome of the case is expected to provide significant budgetary relief, as it is anticipated that France will generate approximately EUR 775 million in revenue in 2025 from DST.

Source: Constitutional Court - Decision No. 2025-1157, VATabout

What did the French Constitutional Court decide about the Digital Services Tax?

The Court upheld the legality of the Digital Services Tax, ruling that it does not violate constitutional principles of equality and remains enforceable.

Who challenged the French Digital Services Tax and why?

Digital Classifieds France challenged the DST, arguing it violated equality principles, but the Court rejected these claims and confirmed the tax’s validity.

What are the key features of the French Digital Services Tax upheld by the Court?

The Court confirmed that group-level thresholds, territoriality rules based on national presence, and exclusions of some services were justified and proportionate.

What does this ruling mean for companies already paying DST in France?

Companies that have paid the DST cannot seek refunds on constitutional grounds, and they must continue to comply with the tax requirements.

How much revenue is France expected to generate from the Digital Services Tax in 2025?

France is projected to collect approximately EUR 775 million in 2025 from the continued enforcement of the DST.

How could this ruling influence other EU countries considering digital taxes?

The decision may strengthen the legitimacy of similar digital taxes in other EU countries and reduce the likelihood of successful constitutional challenges.

Digital Services Tax (DST)

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