France: Adopted joint statement on a transitional approach to existing unilateral measures

On 21 October 2021, a joint statement on a transitional approach to existing unilateral measures was adopted by the United States, Austria, France, Italy, Spain, and the United Kingdom. In particular, the transitional approach does not require the signing countries to withdraw their Digital Service Taxes (DSTs) until Pillar 1 (one of the two taxation pillars of the OECD/G20 Inclusive Framework on digital taxation) takes effect. However, the agreement prescribes that until Pillar 1 takes effect, if the DST enforced by a country exceeds the amount that would be taxed under Pillar 1, such excess will be transformed into a tax credit actionable by the Multi-National Enterprise in that country. Finally, as part of the compromise, the United States agree to cease the trade actions against Austria, France, Italy, Spain, and the United Kingdom concerning the existence of DSTs until the implementation of Pillar 1. This interim period will last from 1 January 2022 until the earlier of 31 December 2023 and the implementation of the Pillar 1 multilateral convention.