France reportedly hitting Google with €1.6 billion tax demand
Newswire service Reuters has reported that the French government is set to hit Google with a bill for €1.6 billion in back taxes.
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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Discuss in the forums ReplyI still prefer their approach to ours.
The HMRC top brass want sacking, in all honesty.
Will it happen.. NO!
George Osbourne should also be in the firing line for this, it is shameful pandering on behalf of a cash strapped nation.
It will be deflected away with some Savile/BBC scandal probably.
I think the reason multi-national companies are allowed to get away so lightly with regard to tax is because they are large employers and can help attract other multi-nationals to your country which are also large employers. So what happens off of the back of this could set a precedent for other countries to start charging proper tax on them as well.
That largely depends on the outcome imo -
If France asks for 1.6b but get sucked into a long and vocal legal battle, only to eventually get something along the lines of the ~165m HMRC got out of them, they're going to look pretty stupid...
Similarly, if they ask for 1.6b and Google go 'ok, there you go...', HMRC are going to look pretty stupid...
Given that our effort was along the lines of "Hi Google, sorry to be a pain, but we really need to show that you're paying your dues. How much are you comfortable with?", I'm still in favour of their approach, and I'm willing to bet they fare better.
Agreed
I disagree.
Given that it all likelihood Google broke no laws and just took advantage of loopholes kindly left by our legislators, I think we are better of to just ask nicely if we want anything back.
The French have no legal recourse whatsoever. It's a publicity stunt to hide the incompetence of their legislators. When Google, or some court, shows them the finger, they will turn this whole thing around and blame the big evil corporation to their voters.
I really don't get this whole tax scandal. I "expect" companies to try and pay as little tax as necessary. It's not a charity payment. It's our legislators that are ultimately responsible.