Google, like other similar large companies across Europe funnels its worldwide revenue through Dublin to benefit from Ireland’s 12.5 percent business tax rate.
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Local authorities started an inquiry into Google’s supposed tax fraud in 2011 when they raided their French offices for the first time.
French officials believe Google owes €1.6 billion (US$1.8 billion) in back taxes, and unlike the United Kingdom tax authority, they are disinclined to negotiate a settlement, local media reported in February.
Al Verney, a spokesman for Google in Europe, said in an email: “We are cooperating with the authorities to answer their questions”.
French prosecutors began investigating Google’s finances last June, following allegations from the tax authorities that the company was involved in serious tax fraud.
French authorities are probing if “Google Ireland Ltd is permanently established in France and if, by not declaring some of its activity on French soil, it has failed to meet its fiscal obligations”. The story is still developing.
Google is not the only USA corporation whose tax bill is under scrutiny in Europe.
It’s common practice for multinationals to base themselves in low tax countries, such as Ireland or Luxembourg. Tech giants Apple Inc. and Amazon.com Inc. are still under investigation after the European Union criticized their tax arrangements in Ireland and Luxembourg.
According to ABC News, today’s raid at Google Paris was in part due to a business structure employed by the search engine giant – a common business technique for lowering tax liability. But it looks like Google’s got some troubles brewing up with the French authorities, as the latter have conducted a raid at the company’s offices in Paris. Over 100 investigators entered the campus in search of evidence of €1.6 billion in unpaid taxes.
Investigators have been probing Google’s offices in central Paris since 0500 am (0300 GMT), said the source, who declined to be named.
According to analysis by the Independent, Google could owe the United Kingdom six times more than it has agreed to pay, or £800 million.
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Earlier this year Google reached a controversial £130 million settlement with the British government over an audit covering 10 years of accounts.
