Google could face claim for billions of euros in back taxes following raid on Paris offices

Financial prosectutor’s office says raid was part of investigation into alleged ‘serious tax fraud and conspiracy to launder money as part of serious tax fraud’

John Lichfield
Paris
Tuesday 24 May 2016 17:36
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An army of investigators are looking for evidence that Google has full-scale business activity in France
An army of investigators are looking for evidence that Google has full-scale business activity in France

Google could face a claim for billions of euros in back taxes after 100 police and tax investigators raided the company’s offices in Paris as part of an investigation into alleged systematic fraud.

The army of investigators were looking for evidence that Google has full-scale business activity in France, not a mere branch office of its European headquarters in Ireland.

The internet giant is now certain to come under renewed, fresh pressure over its controversial tax affairs, which have seen its most senior executives in Britain hauled in front of parliamentary select committees to account for their legal avoidance measures.

If the French authorities decide that Google is flouting the terms of a France-Ireland tax treaty, the internet giant could face a trial for fraud and claims for several billion euros in back taxes, officials said.

The French crack-down is likely to renew criticism of the British Government, which reached a deal with the internet colossus in January involving a payment of UK back taxes of just £130m for the period 2005-2015.

The French investigation is understood to be quite separate from a claim by Paris against Google for €1.6bn in unpaid taxes filed in February.

A police car outside Google's Paris offices during a raid by investigators

Over 100 tax officials and fraud squad officers raided the Google offices in Paris, close to Saint Lazare station, at 5am on Tuesday morning. The raid continued into the night.

The raiders were said to include three senior prosecutors and 25 information technology experts who were studying activities and records in Google computers.

The Paris financial prosectutor’s office said in statement that the raid was part of an investigation, started in 2015, into alleged “serious tax fraud and conspiracy to launder money as part of serious tax fraud”.

Specifically, the prosecutor’s office said that the investigators were searching for “proof that the the company Google Ireland Ltd has a stable organisation in France”. Under the bilateral France-Ireland tax treaty, Irish-based companies which have a “stable” or fully-functioning business in France are liable to pay French taxes.

Google has long claimed exemption from French business taxes on the grounds that its French business is an “auxiliary” enterprise, used only for advertising and research and similar activities.

Like many other multi-nationals based in Ireland, Google uses this exemption to pay business taxes at the low Irish rate – 12.5 per cent.

Google is among a number of companies that have been attacked in Europe for paying low taxes by shuffling revenues across borders.

In a brief statement, the company said: “We respect French legislation and are cooperating fulluy with the authorities to answer their questions.”

Google boss Sundar Pichai denied any wrong-doing by the company

In January, the British Government was heavily criticised after it reached a deal with Google to pay only £130m in back taxes for the decade from 2005 to 2015.

At the time, the French Finance Minister, Michel Sapin, said: “France does not negotiate on taxes.”

During a visit to Paris in February – when news of the 1.6bn tax claim was leaked – the Google boss Sundar Pichai denied any wrong-doing.

“We're a global company. We have to abide by tax laws everywhere,“ he said. “We do abide by local tax laws in every single country.”

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