Overview
In a significant development for multinational companies operating in the digital space, France’s Supreme Administrative Court (Conseil d’État) has referred the country’s Digital Services Tax (DST) regime to the Constitutional Court for review. On June 17, 2025, the Conseil d’État issued Decision No. 502728, referring Articles 299, 299 bis and 299 quater of the French Tax Code, provisions that define the scope, tax base, and assessment procedures of the DST, for constitutional scrutiny. The referral arises from a challenge submitted by Digital Classifieds France, which contends that the current design of the DST violates key principles enshrined in the French Constitution, namely the principle of equality before the law.
In Depth
This legal challenge, known as a priority constitutional question (QPC), has the potential to significantly alter the DST landscape in France. The Constitutional Court now has until September 17, 2025, to issue its ruling. Depending on the outcome, the Court may uphold the DST in its current form, declare certain provisions unconstitutional, or strike down the entire regime. Notably, French constitutional jurisprudence often limits the retroactive effect of its decisions, applying them only to claims pending at the time of judgment. As such, companies that have paid DST in prior years and wish to preserve their rights to reimbursement must act swiftly. Taxpayers are strongly advised to file formal claims with the French tax authorities before the September 17 deadline, in order to ensure their eligibility for any future refund that might result from a favorable ruling.
At the heart of the challenge are several fundamental issues. The claimant argues that the DST unfairly distinguishes between French and non-French companies, as well as between digital and non-digital services, thus violating the principle of equality before the law. Additional concerns include the DST’s group-based thresholds, the method for determining taxable presence in France via the so-called “coefficient of national presence,” and the potential for disproportionate treatment of foreign operators, who may be disadvantaged in enforcement and audit procedures. The case also raises concerns over the way the DST captures revenues (only applying above certain revenue thresholds) which can lead to distortions in treatment between similarly-situated businesses.
This judicial review has broader implications not just for companies currently subject to France’s DST, but also for policymakers and tax professionals tracking the evolution of unilateral digital taxation across Europe. France’s DST, introduced in 2019 and applied retroactively to that year, was among the first in Europe and has since been a focal point in global discussions about fair taxation in the digital economy. If the Constitutional Court finds significant fault with the DST, the ruling may prompt legislative revisions and could even influence similar measures across the European Union.
In the interim, legal and tax teams at affected companies, particularly general counsel, CFOs and group tax directors, should be closely monitoring developments. Those considering filing for a DST refund are encouraged to consult legal advisors and submit claims promptly, as any delay could forfeit their right to benefit from a favorable decision. While the future of the DST remains uncertain, the Constitutional Court’s decision is expected to set a crucial precedent in the intersection of digital regulation and constitutional tax law in France.
