French Court Reviews Constitutionality of Digital Services Tax

July 5, 2025

Featured Partners

The French Constitutional Court will need to assess the constitutionality of the Digital Services Tax (DST) provision in response to claims raised by Digital Classifieds France. On June 17, 2025, the French Administrative Supreme Court referred to a preliminary question on the constitutionality of the DST, which was enacted in 2019.

Background of the Case and Raised Constitutional Concerns

The Digital Classifieds France company claimed a refund of the DST paid, arguing that the DST provisions violate constitutionally guaranteed rights, specifically Articles 6 and 13 of the Declaration of the Rights of Man and of the Citizen of 1789.

The company raised several issues regarding the implementation of the DST. It claims that the DST breaches equality between companies subject to French corporate income tax and those that are not and that its discriminatory exclusions violate the principle of equality before tax law.

Furthermore, the company argues that the DST unjustifiably treats companies offering the same service differently, depending on whether the service is digital or not. Additionally, it stated that the group-based threshold rules create unequal treatment and introduce an irrebuttable presumption of fraud, adding that territoriality rules based on a national presence coefficient are neither objective nor rational.

In addition to these arguments, Digital Classifieds France provided additional ones to highlight its claims that DST provisions are unconstitutional. The Administrative Supreme Court found these arguments and claims serious and referred a priority question of constitutionality to the Constitutional Court.

There are three options regarding the Constitutional Court's decision. It can determine that the DST is fully compliant with the French Constitution. This would preclude any further challenges to the DST on any constitutional grounds.

However, should the DST be ruled unconstitutional, DST liabilities would, in principle, cease to apply. Although the taxable persons who have already paid the DST could seek reimbursement, the Constitutional Court may limit the effects of its decision to future fiscal years and ongoing litigation concerning past years. Finally, the Constitutional Court may determine that DST provisions are only partially unconstitutional.

Conclusion

Given the seriousness of the claims and the potential impact of the Constitutional Court’s decision, mainly if DST provisions are found to be unconstitutional, taxable persons subject to this tax should carefully monitor the outcome of the case. Moreover, they should consider their options in either scenario. In addition to this, the eyes of the public will be on the Constitutional Court, as the decision in this case may have a broader impact on any other unilateral digital tax measures in the EU.

Source: Council of State, KPMG

What triggered the French Constitutional Court’s review of the Digital Services Tax (DST)?

The review was triggered by a challenge from Digital Classifieds France, which claimed the DST violated rights under the 1789 Declaration of the Rights of Man. The French Administrative Supreme Court found the claims serious enough to refer the matter to the Constitutional Court.

What constitutional rights does Digital Classifieds France argue are being violated by the DST?

The company claims the DST violates Articles 6 and 13 of the 1789 Declaration, including the principle of equality before tax law and equal treatment of companies offering similar services.

Why is the DST considered potentially discriminatory according to the claims?

It’s claimed that the DST unfairly discriminates between digital and non-digital services, between domestic and foreign companies, and creates unequal treatment based on arbitrary thresholds and territorial rules.

What outcomes are possible from the French Constitutional Court's decision?

The Court may rule the DST fully constitutional, partially unconstitutional, or entirely unconstitutional. Each decision carries different implications for future taxation and past tax refunds.

Can companies recover DST already paid if the tax is found unconstitutional?

Yes, if the DST is ruled unconstitutional, companies that have paid it may seek reimbursement. However, the Court could limit this to pending cases or future tax periods.

Why is the outcome of this case significant beyond France?

The decision could influence the legality and design of other unilateral digital tax measures across the EU, making it a key case for digital service providers operating in Europe.

Digital Services Tax (DST)

Digital