Google has announced to its customers that it will increase advertising prices on its French and Spanish platforms by 2% from May 1 to help offset the impact of a digital tax on profits.
France has been levying the GAFA tax since 2019, and Spain since this year, under pressure from voters, who are forcing the American internet giants to pay a greater share of taxes in the countries where they operate.
As a reminder, Paris implemented a so-called “GAFA” tax in July 2019, in order to reduce as far as possible the enormous disparities observed in taxation between traditional companies and the 4 digital giants, called “ GAFA ”(Google, Apple, Facebook, Amazon).
This project is hampered at the European level by numerous disagreements between the 27 member countries, but also by the reluctance expressed by the American political power, obviously hostile to additional taxes on the income of its champions in the digital sector.
What changes for your Google Ads billing?
Google details all the changes regarding the additional fees that will take effect from May 1, 2021 in an email sent to all advertisers. For all advertisements purchased through Google Ads, an additional 2% charge will appear on a separate line on your invoice or Google account statement. These charges will also be displayed in the “Transactions” section of your Google Ads account . The search engine giant adds that these additional costs will be subject to all taxes applicable in the countries concerned, such as VAT.
However, this 2% will not be Belgium Phone Number List charged in the same way depending on the payment method you have chosen.
If you have opted for a manual payment method, the additional fees will be charged after the amount of credit allocated to your campaigns is fully spent.
If billed monthly or auto-paid, these charges will be added to your Google Ads account budget.
The increase in advertising prices decreed by Google aims to “cover part of the cost of compliance with the laws concerning taxes on digital services in France and Spain,” said the internet giant in an e- mail relayed by AFP.
In France, companies in the internet sector with turnover of over 750 million euros worldwide, and 25 million in France, must pay a 3% tax on their activities in France, in particular on advertising sales and income related to marketplace activity.
Jean-Luc Chetrit, director of Union des Marques, an organization which aims to represent the biggest brands in France, said that Google’s decision “would cut the investment capacity of brands at a time when all companies are going through an unprecedented crisis ”.
Google did not respond to requests for clarification solicited by AFP, but Karan Bhatia, head of government affairs at Google, warned in February that “taxes on digital services complicate efforts to reach a balanced deal that works for all countries. We therefore urge these governments to reconsider what essentially looks like tariffs, or at least to suspend them while negotiations continue ”.
The “GAFA” are in the crosshairs of several European governments who accuse them of exploiting the common rules of the European market to declare all their profits made on the continent in countries with advantageous taxation such as Ireland or Luxembourg.
Many old continent politicians claim that GAFA deprive national tax authorities of millions of euros even as they profit from an explosion in online activity due to the rise of working from home and the imperatives of social distancing linked to the Covid-19 crisis.
The American giants retort for their part that they are unfairly targeted by discriminatory levies.
Towards a global agreement?
Amazon had already responded to the tax put in place by the French government last October by increasing the prices applied to its sellers based in France by 3%.
Apple has followed suit by increasing the commission it charges developers who sell applications on its platform, not only in France, but also in Italy and Great Britain.
Facebook, for its part, said it has no plans at this time to increase the prices of its advertisements in France or Spain, and is hoping for a global agreement on the taxation of multinational internet companies.
The French tax movement on global digital companies has made it a pioneer in the tax fight against Internet multinationals, whose tax bill is often minimal compared to their income. France’s GAFA tax put € 400 million in government coffers in 2019, and the government reapplied the levy last year despite pressure from the Trump administration to drop it.
With President Joe Biden in the White House, the Organization for Economic Co-operation and Development (OECD) – which oversees negotiations on a digital tax – said it hoped a meeting of G20 finance ministers scheduled for the next day. July would lead to an agreement on the matter.