French prosecutors have turned up the heat in the spreading European tax war against US tech giants, with an early-morning raid yesterday on Google’s Paris office. The investigation centres on Google’s European headquarters in Dublin, through which it routes profits from its European operations.
The raid in Paris involved 25 data experts and was part of a preliminary investigation into aggravated tax fraud opened in June last year, the French authorities said. The move comes as European authorities attempt to crack down on the use of complex tax-avoidance schemes by US and other multinational companies to shift profits abroad in order to declare them in lower-tax jurisdictions.
France has led the charge, including with previous raids on Google and Microsoft. Italian authorities claimed victory with a €318 million tax settlement from Apple late last year and have also eyed Google.
Back taxes
Reports have suggested France is seeking as much as €1.6 billion in back taxes from Google, though an official familiar with the case would not comment on the amount.
The company has based its European headquarters in Dublin and channels its profits through Ireland, resulting in it paying only €5 million in corporate tax in France in 2014 compared with revenue that year of €225.4 million, according to filings.
Google has used the “double Irish” tax structure to channel money through Ireland and out to Bermuda, also limiting any tax liability incurred here. It employes 2,200 people in Dublin. At the heart of the investigations in Europe into Google’s tax affairs are its claims that sales across the continent are managed from its Irish operation, to which the bulk of the profit accrues.
Fiscal obligations
In a statement, the French financial prosecutor’s office said: “The investigation aims to verify whether Google Ireland Ltd has a permanent base in France and if, by not declaring parts of its activities carried out in France, it failed its fiscal obligations, including on corporate tax and value added tax.”
Google said: "We comply with the tax law in France, as in every other country in which we operate. We are co-operating fully with the authorities in Paris to answer their questions, as always." – (Copyright The Financial Times Limited plus additional reporting by Irish Times business staff)
