France Proposes AI Subscription Tax, Token Fees

French Lawmakers Consider AI Taxes Amid Budget Deficit

French lawmakers recently proposed amendments to the 2027 budget that would introduce taxes on AI subscriptions and token fees. These proposals emerged against a backdrop of significant fiscal challenges for the French government, which is grappling with a projected budget deficit of 5.4% of GDP and a need to adjust spending by €54 billion. The broader context includes a proposed tax hike on television subscriptions.

The French government is facing a substantial budget shortfall. The current fiscal deficit is estimated to reach 5.4% of GDP this year, exceeding the European Union’s 3% threshold. Public debt is also projected to climb to 121.7% of GDP next year. While the proposed AI-related tax amendments have so far been rejected and have not taken effect, the government’s budget proposal itself includes new tax bases. These include levies on aviation fuel, sugary processed foods, and a doubling of the value-added tax on television subscriptions from 10% to 20%. Given these broader tax considerations, the targeting of AI subscriptions was not entirely unexpected.

Previously, on October 16, a 31.4% tax on profits from cryptocurrency-to-stablecoin exchanges was narrowly approved by a vote of 38 to 37. On October 30, a “traffic tax” of €0.055 per gigabyte of data was also passed by a slim margin of 11 to 10. The proponents of this data tax estimated it could generate €10 billion annually. Additionally, a tax on excess dividends was also approved.

However, neither the cryptocurrency tax nor the traffic tax have yet become law. They were amendments passed during the first reading of the 2027 budget bill in the National Assembly. Their passage at this stage merely means they are included in the version of the bill being considered by the National Assembly and are not yet finalized.

One of the proposed amendments, numbered 2290, aimed to tax companies with over 250 employees in France on their spending related to the purchase, rental, or subscription of AI services. The amendment did not specify a tax rate, and lawmakers responsible for budget oversight suggested it might be blocked on constitutional grounds. This amendment was rejected on October 30, with the government also opposing it.

A second amendment, number 1670, proposed a 1% tax on annual expenditures exceeding €100,000 on AI and robotics, including fees for AI model billing units, known as tokens.

A third amendment, number 952, sought to expand the digital services tax to encompass AI, levying it on companies selling AI products. The explanatory text specifically mentioned that OpenAI and Claude were not currently within the scope of this proposed expansion. Both the second and third amendments were rejected by the finance committee.

In summary, none of these proposed AI-related taxes have taken effect. Even if they were to be enacted, their scope would be limited to France. Nevertheless, the prospect of taxes on chatbot subscriptions may arrive sooner than anticipated.