France reportedly hitting Google with €1.6 billion tax demand

February 25, 2016 | 14:53

Tags: #hmrc #tax #tax-avoidance #tax-evasion #tax-minimisation

Companies: #alphabet #france #google #uk

The French government is reportedly demanding that Google pay €1.6 billion in back taxes, just one month after the UK government agreed to accept a mere £130 million over the same complaints.

Multinational advertising giant Google is a company not short of a bob or two, and one of the ways in which it keeps the coffers full is by taking advantage of every single tax loophole it can find - including the ones which are perhaps stepping over the line of legality. In the UK, the company was found to have been taking advantage of a circuitous profit transfer mechanism - whereby its UK income was diverted through an Irish subsidiary, from the Irish subsidiary to a Dutch subsidiary, then returning back to the Irish subsidiary - to keep its tax burden down. An investigation by Her Majesty's Revenue and Customs (HMCR) called shenanigans on the process, demanding that Google pay a more proper rate of tax on its UK earnings going forward but allowing it to get away with paying just £130 million in back tax - a saving estimated at around £1.67 billion.

The French government, though, isn't such a pushover. Investigating the same tax dodges as its UK equivalent, France's tax authority has been reported by Reuters as preparing to demand €1.6 billion in back tax payments - though this has not yet been officially confirmed by either the French tax authority or Google's local subsidiary.

If true, it would represent a far better deal for the French government than HMRC's extremely lenient demand on Google, and echo a statement made by French finance minister Michel Sapin which described the sums being discussed within his department as being far higher than those of HMRC's deal.
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