France raids Google headquarters in Paris as part of a tax evasion inquiry amid public anger. The country is investigating the way multinational companies use their footprints around the world to minimize tax, France, Britain and others have sought ways to make sure Google, Yahoo! and other digital giants, who often have their tax bases in other countries, pay their taxes locally.
Google said it was fully complying with French law, NDTV reports. Investigators from the financial prosecutors office and France’s central office against corruption and tax fraud, accompanied by 25 IT specialists, took part in the raid.
“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,” the prosecutor’s office said in statement.
As France raids Google headquarters in Paris, the search giant has based its regional headquarters in Dublin where corporate tax rates are lower than elsewhere in Europe. Google, now part of Alphabet Inc, has been under pressure in recent years over its practice of channeling most profits from European clients through Ireland to Bermuda, where it pays no tax on them.
Prosecutors said they want to establish whether the Irish company through which Google funnels the majority of its European revenues does in fact control a “permanent establishment” in France. Google maintains that its large offices in Paris, London and other European capitals are not fully fledged businesses, but operate as mere satellites of its international headquarters in Dublin, providing back office services like marketing.
Google routes most of its non-US revenue from activities such as advertising through Dublin, where the 12.5% corporation tax rate is low by European standards. The structure allows the company to avoid both European and US taxes on the income, iNews Today reported.
The raid was carried out as part of an investigation that started in June last year. “We are cooperating with the authorities to answer their questions,” Al Verney, a spokesman for Google in Europe, said in an email. Google Executive Chairman Eric Schmidt approached for a reaction at a conference in Amsterdam, declined to comment while France raids Google headquarters in Paris.
Investigators started their investigation of Google’s offices in central Paris at 5 A.M., a source close to the finance ministry said. France is seeking some $1.8 billion in back taxes from U.S. Internet giant Google, criticized for its use of aggressive tax optimization techniques, another finance ministry source had said in February.
Europe’s competition authorities have been examining whether some deals struck by big companies with national tax authorities amount to illegal state aid. In April, the EU unveiled plans to force large companies to disclose more about their tax affairs.
They will have to declare publicly how much tax they pay in each EU country as well as any activities carried out in specific tax havens. The rules on “country-by-country reporting” would affect multinational firms with more than $750 million in sales.
Big multinationals have not been spared. The French tax office, in seeking back-taxes from Google, has pointedly refused to strike a deal with the US internet giant as the UK has. Earlier this year, the finance minister Michel Sapin said: “The French tax authorities do not negotiate on the amount of tax.” Google, which has been in the sights of the French tax authorities for around five years, has insisted that it conforms to tax law in every country where it operates.
Skyliner said that while France raids Google headquarters in Paris, the company had agreed in January to pay 130 million pounds in back taxes to Britain, prompting criticism from opposition lawmakers and campaigners.