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French Digital Services Tax: a French court refers to VAT concepts for purpose of determining / mitigating the DST basis

On September 23, 2025, the Tax Court of Cergy-Pontoise[1] granted partial restitution of the Digital Services Tax (DST) requested by a digital marketplace, on the grounds that some of the services provided to users should be considered separable and independent from the taxable digital intermediation service, and thus excluded those separable services from the DST basis.

As a reminder, the Digital Services Tax was established by law no. 2019-759 of July 24, 2019. The aim of the French Ministry of Finance[2] was to “implement a tax on the gross revenues derived from certain digital services provided by major companies in the sector, characterized by the significance of the internet user in value creation”.

The legislator[3] expressed this intent by subjecting, notably, “The provision, via electronic communications, of a digital interface that allows users to contact other users and interact with them, particularly for the purpose of delivering goods or providing services directly between these users.”

Article 299 bis of the French Tax Code[4] thus provided that, concerning digital intermediation services, the amounts taxable under the Digital Services Tax are comprised of all sums paid by users of the digital interface in question, except for sums paid in return for transactions that constitute, economically, operations independent of the access and use of the digital interface.

However, the French tax authorities’ official guidelines[5] specify that the delivery of goods and services  cannot, under any circumstances, be considered independent of access or use of the interface when it is:

  • essential for accessing and using the digital interface in question, or without which such access or use would occur under less favorable conditions than those available to users who benefit from the aforementioned delivery of goods and services
  • intended to provide additional or improved functionalities in the use of the digital interface
  • directly intended to increase interactions on the digital interface in question.

The French tax administration furthermore provides an example that closely resembles the present case to illustrate services which, in its view, are necessarily dependent on digital intermediation services.

Example: The operator of a marketplace provides sellers services that enhance the visibility of their offerings, showcase the quality of physical delivery of goods to consumers, or enable privileged placement in search results. Since these services aim to improve the use of the marketplace for sellers, they are not independent and will therefore be included in the tax base.

However, by applying the criteria used for VAT purposes to determine the VAT consequences of a transaction, the Tax  Court of Cergy-Pontoise appears to deviate from the position of the tax authorities in this case, allowing for a broader exclusion of services provided by platform operators from the taxable base of the Digital Services Tax.

Statement of facts

The platform in question provides users with a digital marketplace that enables sellers and buyers to connect for the purpose of delivering goods and services. In addition, the operator also markets two specific programs to the users of the platform, the inclusion of which in the DST taxable base was disputed in this case.

The first program consists of a logistics service that includes processing orders from third-party sellers, storing them in logistics centers, ensuring fast shipment and delivery, and managing customer returns through the consumer service. It also includes a listing feature, allowing subscribing sellers to benefit from additional functionalities and commercial advantages that enhance visibility on the marketplace.

The French tax administration refused to exclude this program from the DST on the grounds that this service, whose main element is, according to them, the listing, constitutes an inseparable operation from the access and use of the marketplace.

The second program offered includes several distinct services, notably a fast and free shipping service for products purchased on the marketplace (“Prime Delivery“), a grocery delivery service (“Prime Now“), video content access service (“Prime Videos“), and an online gaming download service (“Prime Gaming“).

The tax authorities, considering the “Prime Delivery” service to be the main component of the offer, refused to exclude this offer from the DST on the grounds that it did not constitute an independent operation from the access and use of digital intermediation.

The Administrative Court interprets the DST rules using concepts defined for the purposes of VAT

Applying the principles used in the context of VAT to determine the regime of a set of various transactions (Article 257 ter of the French Tax Code), and specifically noting the scope of the services, their optional nature, their billing methods, and their purpose for the average consumer, the Administrative [BJ1] Court held:

  • On the one hand, that the use of the marketplace and the programs in question do not objectively constitute a single economic service or a complex unique operation.
  • On the other hand, that these programs do not constitute an ancillary service but rather an independent service from the access or use of the interface.

Consequently, the court validates the exclusion of the remunerations received by the platform for these two programs from the DST taxable base.

Internet/Marketplace Operators: Leveraging VAT Principles to Assess DST Liability

In its judgment, the Tax Court of Cergy-Pontoise expressly referred to the criteria developed in the context of VAT to determine whether a collection of services should be treated as a single transaction subject to a unified VAT regime, or as several independent transactions, each subject to its own VAT treatment.

Indeed, under VAT rules, two or more elements or acts are subject to the same regime if they are so closely linked that, objectively, they form a single, indivisible economic supply, and any division would be artificial.

By adopting the perspective of the average consumer to assess the scope of operations for the DST, the judge aligns with VAT case law (notably that of the European Court of Justice) concerning the VAT qualification of composite transactions.

Furthermore, a complementary service is subject to the regime of the main service to which it is related if it is considered ancillary to the main operation. To assess whether the service is ancillary or not, the judge relies on a set of indicators, most of which were used by the Tax Court in this case.

Following this judgment, internet/marketplace operators who fall within the scope of the DST can efficiently be inspired by jurisprudential trends identified in VAT concerning the scope of a unique complex operation. This approach shall help them assess, on a case-by-case basis, whether the services offered should indeed be included in their DST taxable base.


[1] Judgment no. 2300178 – SAS AMAZON ONLINE France

[2] Statement of reasons for Bill no. 1737, filed on Wednesday, March 6, 2019, establishing a tax on digital services and modifying the trajectory of the reduction in corporate tax.

[3] Article 299 of the French Tax Code, in its version in force from July 26, 2019, to August 18, 2022

[4] The Digital Services Tax is now codified in Articles L 453-45 to L 453-83 of the Code on Taxes on Goods and Services.

[5] BOI-TCA-TSN-20 §140


 

  • Bertrand Jeannin

    Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT…

  • Jean-Charles Orsini

    Jean-Charles joined the Indirect Tax department of Deloitte Société d’Avocats in 2013. He assists French and international groups within the…