July 15, 2019 / 5:45 AM / 7 months ago

Norway's Adevinta says new French digital tax may hit earnings

OSLO (Reuters) - Online advertising group Adevinta said the newly introduced digital tax in France lacked clarity but would likely hit the Norwegian company’s earnings as it posted second-quarter earnings roughly in line with expectations.

France’s Senate gave final approval to a tax on big technology firms on Thursday.

The 3% levy would apply to digital revenues from digital services earned in France by firms with more than 25 million euros ($28 million) in French revenue and 750 million euros worldwide. It is due to kick in retroactively from the start of 2019.

Adevinta, the owner of France’s leading online platform for buyers and sellers, leboncoin.fr, said the tax appeared to unfairly target companies that already pay taxes in France.

“It is a paradox. This tax is meant for the big international companies that do not pay taxes,” Adevinta CEO Rolv Erik Ryssdal told Reuters.

“We already pay taxes in France, this is double taxation. I don’t think this was the intention.”

In its second-quarter report published on Monday, Adevinta did not say by how much the tax could hit its bottom line.

“At this stage it is not possible to do a reliable estimate of the impact due to the complexity of applying the wording of the bill on the group businesses,” it said in the report.

The firm was seeking clarification from French tax authorities about the specifics of the new law, including what kind of revenues would be counted and what the threshold would be for paying the tax.

“We hope it will happen in the third quarter,” Ryssdal said.

Second-quarter earnings before interest, tax, depreciation and amortization (EBITDA) surged 20% to 50 million euros, excluding joint ventures and associated business, roughly in line with 49 million euros expected by four analysts in a Refinitiv poll.

Adevinta bought two online businesses in France, Locasun and PayCar, in recent months to strengthen the offering of its leboncoin.fr. More acquisitions were expected in France, as well as other core markets, Spain and Italy, Ryssdal said.

“I don’t think we are done. We want to continue to expand in France,” said Ryssdal. “In France, Spain and Italy, we will be looking for more opportunities.”

Reporting by Gwladys Fouche and Victoria Klesty; Editing by Sherry Jacob-Phillips and Edmund Blair

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