France to seek €1.6 billion from Google in back taxes

The Googleplex Google HQ by Trey Ratcliff on Flickr https://www.flickr.com/photos/stuckincustoms/4323977677
News
25 Feb, 2016

The sum is ten times more than the £130m HMRC asked Google to pay

France has demanded €1.6 billion from Google in back taxes, after the tech giant paid the UK just £130 million on ten years' worth of tax.

The news comes from an unnamed finance ministry official, speaking to Reuters on condition of anonymity.

Google has declined to comment on the news, and has reiterated that it complies with the letter of tax laws in all countries it conducts business in.

The amount sought by French tax authorities, which equates to just under £1.3 billion, is around ten times more than the sum the UK agreed with Google last month.

HMRC's controversial tax deal with Google saw the company pay just £130 million on ten years' worth of back taxes.

The government's Public Accounts Committee has joined the list of figures criticising the deal, saying yesterday that the amount paid by the company "seems disproportionately small".

The committee said that public anger over the issue was "palpable", and noted that HMRC "appears to have settled for less" tax than other countries' demand.

France's finance minister Michel Sapin also slated the deal earlier this month, and indicated that his country would be pursuing a "much bigger" sum from the firm.

Google could be hauled over the coals for tax issues in other European territories as well. Multiple countries are reportedly seeking multi-million Euro fees from the company, including Italy, which is said to be after almost €230 billion.

08/02/2016: Google pays London staff more than double its Ireland wages

Google has come under fresh fire this week after revelations that staff at its Irish campus are paid less than half what their London colleagues make.

The tech titan has been at the center of a tax scandal, after reaching an agreement with HMRC that resulted in the company paying just £130 million in back-taxes for the past ten years.

Part of Google’s argument is that its main European business is conducted through its Ireland operations, and that other regional locations such as its London office assist in a ‘supporting role’.

However, this could be thrown into doubt by the news that Google’s London-based employees make an average salary of £160,000 - more than double the £72,000 average wage of the workforce at its alleged main operation in Dublin.

Google’s European chief Matt Brittin will be hauled in front of the government’s public accounts committee on Thursday to answer questions about the company’s operations.

The questions are likely to focus on whether or not the company can continue to claim that it does all its business through Ireland, when it pays its London employees more money.

During a previous testimony to the committee, Brittin maintained that no one in the UK was selling for Google. However, he also said he could understand how not only MPs, advertisers and the public, but also members of Google’s own UK staff, could feel like they were closing deals.

The company – which plans to spend £1 billion on new London offices – is simply “paying the amount of tax that HMRC agrees we should pay”, according to a spokesperson.

They said: “Governments make tax law, the tax authorities enforce the law and Google complies with the law.”

03/02/2016: France warns of "much bigger" tax bill following Google-UK deal

French tax authorities have criticised Google's £130 million UK settlement, saying they are seeking a substantially larger amount. 

The country’s finance minister Michel Sapin has become the latest political figure to attack Google’s tax agreement with HMRC. 

Speaking at a conference in Paris, Sapin said the UK deal is overly generous towards Google, and seems "more the product of a negotiation than the application of the law". 

He called it "lump sum taxation", and stated that "we don't want to do this in France".

He warned that Google was facing a "much bigger" tax bill in France, whose government is seeking an estimated €1 billion (£748.5 million) from the company in back taxes according to French magazine Le Canard Enchaîné.

"The French tax administration does not negotiate the amount of taxes owed," a spokesperson for the French finance ministry told AFP (French) in relation to the deal. "It applies the rules."

Sapin’s comments follow a raft of objections from UK officials, including high-ranking members of both Labour and the Scottish National Party (SNP). 

The £130 million sum was decided on during closed-door negotiations, following a six-year audit of the company’s UK tax liability.

The investigation – which covers the financial years from 2005 to 2015 – centered around whether or not Google’s transactions with British businesses should be taxable in the UK.

Currently, the company falls under the Republic of Ireland’s tax jurisdiction, as it claims that most of its EU operations are routed through its Dublin headquarters.

The taxman, on the other hand, felt that Google’s UK profits (which totaled £4.6 billion in the UK for 2015) were subject to British tax laws.

However, many EU politicians claim that this constitutes an unfairly favourable deal from the UK government, and are demanding much larger sums.

Google could be facing a large tax bill from Italy as well as France, according to Reuters. The government there says the company has evaded €227 million in taxes, split between revenues and royalties.

This marks the latest in a long line of clashes between the search tycoon and European regulators. 

In addition to the current scandal and probes into whether its Irish tax dealings constitute illegal state aid, Google is also in the midst of an EU antitrust investigation into potential abuse of its search monopoly.