French per-gigabyte data tax threatens VLC with over €1 million annual bill

France's National Assembly has approved amendment I-1358 to the 2027 finance bill, which would impose a tax of €0.055 per gigabyte on all data delivered to French internet subscribers. The measure, introduced by deputy Laurent Lhardit, is designed to extract revenue from large technology companies such as Google, Meta, Amazon, and Netflix, with proponents estimating €10 billion in annual state revenue based on 200 billion GB of traffic. However, the legislation contains no explicit exemptions for non-profit organizations, free software projects, or free content distributors. VideoLAN, the French non-profit behind the open-source VLC media player, has publicly stated this tax would cost it over €1 million per year before revenue-based caps apply. The tax is measured purely by data volume without regard to content type or destination, and the amendment's dual caps—15% of French revenue or 2% of total revenue—are joined by ambiguous language that does not clarify which applies when they differ.

The controversy has drawn sharp criticism from multiple French technology figures. OVHcloud founder Octave Klaba estimated his company's gross exposure at approximately €70 million annually, while Free Telecom's Xavier Niel denounced the lawmakers as incompetent. VideoLAN directly challenged Lhardit's defense that revenue caps would protect small entities, pointing out his apparent confusion between revenue and profit models. The tax revenue flows to the state budget rather than to telecom operators for network investment, undermining the 'fair share' argument European telcos have long advanced. Critics note that without content-neutral exemptions, the law creates a precedent that could spread to other European jurisdictions and disproportionately burden organizations without pricing power to pass costs to consumers.

How the French data tax mechanism works

• Tax structure: The amendment imposes €0.055 per gigabyte on 'producers of digital data' delivered to French ISP subscribers, with volume measured by internet providers and oversight split between telecom regulator Arcep and tax authority DGFiP.
• Revenue caps with ambiguity: Liability is nominally limited to either 15% of France-specific revenue or 2% of global revenue, but the text uses 'or' without specifying which cap governs when the two thresholds produce different results.
• Content-blind measurement: The tax counts only raw data volume with no differentiation between commercial streaming, open-source software distribution, or other content types, and no destination-based carve-outs.
• Budget destination: Unlike network usage fees that might fund infrastructure, revenue from this tax is directed to France's general state budget, framed as addressing tax fairness and ecological data compression incentives.
• Exposure calculation uncertainty: VideoLAN's €1 million figure represents pre-cap gross liability; the actual amount cannot be determined due to textual ambiguities and the lack of non-profit exemptions in the current draft.

Why it matters

This development poses a direct threat to the sustainability of major open-source projects headquartered or operating in Europe, as distribution of software binaries, updates, and media content could become a taxable liability regardless of non-profit status. For Linux distributions and open-source software that rely on high-volume global distribution with minimal revenue, similar tax structures in France or elsewhere could force projects to restrict access, relocate infrastructure, or divert development resources to compliance and tax obligations. The precedent risk is substantial: if France enacts this measure without free software exemptions, other European Union members facing budget pressures could replicate the model, creating a fragmented regulatory environment that disadvantages non-commercial open-source ecosystems relative to advertising-funded or subscription-based proprietary platforms.