French Senate approves tax as U.S. opens probe into digital levy

PARIS (Reuters) – France’s Senate on Thursday approved a tax on big technology companies, potentially opening a new front in a trade row between Washington and the European Union.

The tax will apply a 3% levy on revenue from digital services earned in France by firms with over 25 million euros in French revenue and 750 million euros ($845 million) worldwide. It is due to kick in retroactively from the start of 2019.

U.S. President Donald Trump on Wednesday ordered an investigation into the French tax, a step that could lead to the United States imposing new tariffs or other trade restrictions.

“Between allies we can and should solve our disputes not by threats but through other ways,” Finance Minister Bruno Le Maire told senators before the final vote.

“France is a sovereign country, its decisions on tax matters are sovereign and will continue to be sovereign.”

France pushed ahead with the tax after EU countries failed to agree a levy valid across the bloc in the face of opposition from Ireland, Denmark, Sweden and Finland.

The digital tax spat is separate from the trade row, but could be used by Trump to try to obtain EU concessions on the trade front. The United States and the EU have threatened to impose billions of dollars of tit-for-tat tariffs on planes, tractors and food in a nearly 15-year dispute at the World Trade Organization over aircraft subsidies given to U.S. planemaker Boeing Co and its European rival, Airbus SE.The French government says the tax does not specifically target U.S. companies and will affect European and Asian firms as well.

Additional reporting by Myriam Rivet and Francesco Guarascio; reporting and writing by Leigh Thomas; editing by Richard Lough and Kevin Liffey

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