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Be Thankful I Don’t Take It All – France Moves to Tax the Value of Data

If you gather bits, I’ll tax the rake

If you serve up ads, I’ll tax the take

Were the Beatles still recording today, they might have to add this verse to Taxman. As what will surely be the opening salvo in government efforts to find ways to recapture the value of the personal data upon which so much of our digital economy now seems to depend and return it to consumers, France is now set to become the first European country to implement what is effectively a “data tax”.

About 30 companies, mostly from the US, may soon have to pay a 3% tax on their revenues. The tax will mostly affect companies that use customer data to sell online advertising. Justifying the new tax, French Finance Minister Bruno Le Maire clearly drew the battle lines:

This is about justice . . . . These digital giants use our personal data, make huge profits out of these data . . . then transfer the money somewhere else without paying their fair share of taxes.

The bill would apply to digital companies with worldwide revenues over 750 million euros ($848 million), including French revenue over 25 million euros. Not surprisingly, Google, Amazon and Facebook are squarely in the crosshairs of the new tax.

According to European Commission figures, the FANG companies and their ilk pay on average 14 percentage points less tax than other European companies. France took unilateral action after a similar proposal at the EU level failed to get unanimous support from member states, although Le Maire said he would now push for an international deal by the end of the year.

Lest you think this is just a European phenomenon, you need only look west to California, where Governor Newsom has commissioned the study of “data dividends” to help address the digital divide. In fact, the much-discussed California Consumer Privacy Act already contains provisions encouraging digital companies to compensate consumers for the use of their personal data. See our recent alert on data dividends and the CCPA here.

There will be lots more action in the “value for data” space in coming days. While academics debate whether data is more like labor or more like capital, we expect state and federal regulators to look to the value of data as a means to address the challenges of artificial intelligence and income inequality.

Copyright © 2022 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume IX, Number 67

About this Author

Philip Gura, Womble Dickinson Law Firm, Atlanta, Cybersecurity Law Attorney
Senior Division Counsel

Phil Gura has more than 30 years of experience helping companies manage privacy, data security, governance and regulatory compliance challenges. For the past 15 years, he has served as the Chief Legal Officer of major corporations, including Merchant Customer Exchange LLC (MCX), RaceTrac Petroleum Inc. and LaRoche Industries, Inc. His in-house experience includes managing and directing corporate governance, regulatory/compliance, privacy/ data security and intellectual property efforts.

Phil most recently served as Chief Legal Officer of Sionic...

Theodore Claypoole, Intellectual Property Attorney, Womble Carlyle, private sector lawyer, data breach legal counsel, software development law

As a Partner of the Firm’s Intellectual Property Practice Group, Ted leads the firm’s IP Transaction Team, as well as data breach incident response teams in the public and private sectors. Ted addressed information security risk management, and cross-border data transfer issue, including those involving the European Union and the Data Protection Safe Harbor. He also negotiates and prepares business process outsourcing, distribution, branding, software development, hosted application and electronic commerce agreements for all types of companies.