Amazon pass cost of French 3% digital tax on to their merchants

By Chris Dawson August 19, 2019 - 3:53 pm

High Street retailers and the quangos what lobby on their behalf have been complaining for years that online marketplace and other digital giants aren’t paying their fair share of taxes. On the high street you have to pay rates whereas online there’s corporation tax but many digital giants funnel their income through a variety of holding companies and pay little tax in comparison to high street retailers in the countries they operate.

The so called GAFA tax (Google, Apple, Facebook and Amazon) was supposed to apply to the largest online companies but the French have just discovered it’s the small businesses who are to be hit in the pocket.

It’s fair to point out that the digital giants pay their taxes. They pay what the law says they have to pay and, although they may have smart accountants, they also invest heavily and that comes at a cost… none less so than Amazon who have a phenomenal warehouse building program. It’s not Amazon’s fault that large warehouses are out of town and so square foot for square foot they pay less than a high street retailer.

So, the solution appears to be to impose a digital tax which is being discussed in the UK and has been implemented in France. The French have a 3% digital tax based on revenues. Happy days? Not if you’re a marketplace seller based in France.

Amazon France have just emailed all their sellers to tell them that they aren’t paying the 3% digital tax themselves. Amazon are passing the digital tax on to all the small businesses that sell through their site.

This may well not just impact the 10,000 or so French sellers who trade on the Amazon marketplace in France. It could also impact merchants in other European countries who trade on Amazon France.

Whatever the rights and wrongs of a digital tax on Internet giants, hitting the small businesses that trade online isn’t the solution and whilst Amazon are on the face of things quite at liberty to pass on the tax it’s not going to help French (or international merchants) to trade online. Far from being a tax on digital giants, it’s yet another tax on small business.

  • 2 years ago

    I’m a merchant on Amazon France, I’m not surprised that Amazon has passed this tax on to Amazon sellers rather then take the hit out of existing Amazon fee’s. However you miss the point that as Amazon is largest seller on Amazon France they will be on the hook for the biggest amount. Ultimately althougth it’s pain as I need to reset the minimum price on my repricing the 3% is universal to all sellers, so I don’t see how it will impact me in anyway apart from put everyione prices up by 3%.

    • 2 years ago

      Merchants putting prices up 3% is the expected reaction. Ultimately this will hit the French consumers the hardest.

      Amazing that the French government didn’t see the costs being passed down to small businesses and via them to the consumer – it’s a stealth tax that will make little difference to Amazon (except on their own retail sales). However Amazon Retail is distinctly different accounting wise to Amazon Services so it wouldn’t surprise me if they find a wheeze to get around paying a bean!

    • Tomas
      2 years ago

      I think its great if everyone has to put up their prices by 3%. It gives the high street a chance to compete. Unless we want to lose that?

  • crackerjackcommerce
    2 years ago

    Authorities tax Amazon, Amazon tax merchants, Merchants tax buyers = ultimately buyers pay more and authorities get more taxes.

    IMHO it does not really send a message / tax Amazon!

  • Jay
    2 years ago

    What the government should have done is made it 20% and not 3%.


    Because 3% is palatable for too many who will continue to stay on Amazon regardless.

    Had it been 20%, Amazon would have had no choice to but to absorb some of it or risk hundreds of thousands of sellers migrating off their platform which is really the only way to stop its monopolistic form.

    If I can sell 20 or 30% cheaper on my own website than I can on any marketplace setup (see I’m not excluding eBay here either?), then consumers will start to force themselves to buy directly at the brands websites rather than simply choosing the lazy, convenient option of a marketplace.

    Marketplaces are popular for three reasons
    1. Choice
    2. Price
    3. Convenience

    Remove the first two and then we all have a level playing field again.

    We’re already cheaper on our website, but it’s not enough to entice consumers off the marketplaces. There needs to be a mass exodus of sellers leaving the marketplaces to change consumer buying behaviour.

  • Stuart
    2 years ago

    But surely Amazon will have to pay the tax themselves on the goods they sell themselves. Passing the tax on to merchants is also the correct thing to do as they are the sellers.

    I’m afraid with any tax or the like it pushes prices up, bit like the minimum wage, that keeps going up so companies have to put there prices up then the increase in wages means nothing.

    Keep us hamsters in our wheels!

  • Morten
    2 years ago

    Of course it pushes the price up. That was the intention of the French goverment all along. Amazon is extremely price competitive and this is aimed at curbing that slightly whilst collecting an enormous wedge of tax revenue for the French goverment. Fair enough.

    Market places have taken over almost entirely. Both brand loyalty in term of specific products and specific retailers has been dying for a long time. This tide will not turn back. If your investing a small fortune in google advertising for your pure play site then good luck, you will need it.

  • ifellow
    2 years ago

    Surely it would be better to stamp out all the Chinese tax fraud. Not sure the grip the Chinese have on Europe.

    But if something is online 1.99 and Maplin (Now gone) was £2.99 or £3.99 id prob go Maplin and get it the same day.

    But when you can get 2 including free delivery for £0.99p whos going to the high street?

    Multiply this effect by nearly every single product type listed for sale and 3% seems a bit of a joke

  • 2 years ago

    The high street has being declining in the UK for years. Maybe the answer is not online. What if, the councils reduced parking charges for shoppers and reduced business rates for retailers?

    • Marc
      2 years ago

      I totally agree with you, I went into a small local town yesterday for the first time in about 6 months and was shocked at what used to be the main shopping streets, now just full of estate agents, restaurants, bars and charity shops. The main shopping area is now out of town and it is excellent.
      BUT the main culprit is the Supermarkets they are the ones that have destroyed the High Streets – They now sell everything and so have forced all the following to close on most high streets – Bakerys, Butchers, Green Grocerys, wine shops, petrol stations, Hardwear shops, kitchen shops, card shops, toy shops, household textile shops and now they are starting to cause problems with the clothing shops.
      Unfortunately these supermarkets are huge backers of political parties and spend huge sums of money lobbying politicians on all sides and spend huge sums of money advertising in papers and on TV. So none of these organisations will ever say anything bad about these supermarkets.
      We no longer sell any household textiles such as towels, sheets etc because we cannot buy them cheaper than what supermarkets sell them for. The Supermarket products are shocking quality but too many poeple seem to just go for the cheap price.
      If only commentators would remember that internet sales, in the UK , is only 19.9% of the Total Annual Retail Sales where as Supermarkets are about 40% and growing (this figure is from ONS for “Predominantly food stores” which does not seem to include petrol and other products).

      We can only hope that supermarkets start being called out for destroying our high streets.

  • Charlie
    2 years ago

    In my opinion, this is a bad move by Amazon. I understand that they have to show some action in opposition to the tax, at least for optics, but it goes against their brand ethos. Amazon’s primary goal is/was always the satisfaction of the customer. They have turned their backs on customers because merchants will have to raise their prices, however, I think eventually Amazon will capitulate and either offer lower referral fees for third-party merchants or just pay out of their own pocket.

    I think at this stage they’re just trying to create blowback and put the French authorities under pressure. I hope the French stick to it and claim the tax they are rightly owed. I say all this as an Amazon seller by the way.

  • Hal
    2 years ago

    I sell on
    French consumers are a NIGHTMARE to please….they open A to Z cases left right and centre….Each time I get aggro (losses) from , I just put my prices up by a percentage each time.

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