- France and the U.S. have agreed on a draft proposal for a French digital services tax at the G-7 summit in Biarritz, France.
- The proposed agreement would see France repay tech companies the difference between the amount collected under its current digital tax model and the amount owed by firms under a new OECD system.
- France passed a 3% tax in July that targets around 30 big tech companies including Facebook, Amazon and Google.
U.S. President Donald Trump said on Monday that the United States is close to reaching a compromise over France's digital tax.
Trump's comments came as he spoke to reporters at the G-7 summit in Biarritz, France, alongside German Chancellor Angela Merkel.
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Merkel, meanwhile, said OECD (Organisation for Economic Co-operation and Development) nations wanted a solution to digital taxation by 2020.
France passed a 3% tax in July that targets around 30 big tech companies including Facebook, Amazon and Google. It applies to organizations with annual revenues of more than 750 million euros ($830 million) arising from "digital activities," including 25 million euros ($27 million) made in France.
Tensions over the tax have been rising between the two nations, with U.S. President Donald Trump claiming the levy targets "great American companies" and threatening to impose tariffs on French goods in retaliation.
"If they do that ... we'll be taxing their wine like they've never seen before," he told reporters before leaving for Biarritz, according to Reuters.
Although France pushed forward with its own domestic tax on digital companies, an EU-wide effort failed last year. However, EU chief Donald Tusk said at the G-7 summit on Saturday that the EU would "respond in kind" if France was targeted by the U.S. in response to its digital tax.
On Friday, reports in the Financial Times and Politico, citing internal documents, claimed EU officials were planning to launch a sovereign wealth fund worth $110 billion to invest in European companies.
According to the reports, the proposal would be designed to help European firms catch up with competitors from the U.S. and China, with the draft explicitly naming a slew of tech giants including Apple, Amazon, Alibaba and Tencent as threats.