The raids are part of preliminary probe opened in June 2015 to investigate suspected “aggravated fiscal fraud” after French tax authorities lodged a complaint, according to a statement from France’s financial prosecutor on Tuesday.
Advertisement
Reports from came from French newspaper Le Parisien with a source telling the paper that it was a “top secret” investigation and, “the operation was extremely secretive”.
The tech giant has driven down costs by reportedly paying taxes related to commerce in the United Kingdom in Ireland, and is now on the hook for almost €1.6 billion ($1.8 billion) in back taxes.
French Police raided Google’s Paris HQ yesterday as part of a tax investigation, claiming the company owes up to .8 billion in unpaid taxes. A regulatory filing from the company said that a notice from French tax authorities concerned the structuring of Google’s tax affairs. The search engine giant’s primary European headquarters are based in Dublin, which with its 12.5% tax rate helps Google save quite a bit in taxes.
Google and other American technology companies typically base their European subsidiaries in Ireland or other low-tax jurisdictions, such as Luxembourg, allowing them to do business with customers across the continent while minimising their fiscal obligations – a technique known as profit-shifting. The move comes as European authorities attempt to crack down on the use of complex tax-avoidance schemes by United States and other multinational companies to shift profits overseas in order to declare them in lower-tax jurisdictions.
The tax arrangements of worldwide companies have become a hot topic in Europe.
Reuters says the company has routed those profits first through Ireland and then on to Bermuda to avoid taxes, a practice that has drawn criticism.
The French raid was part of an investigation into tax fraud and laundering of the proceeds.
In January, Google reached an agreement with the UK’s tax authorities to pay £130 million in back taxes.
They will have to declare publicly how much tax they pay in each European Union country as well as any activities carried out in specific tax havens.
Google France received a “notification” of the investigation in March 2014 that did not give any precise figures.
Advertisement
Google said the deal to pay back taxes in the United Kingdom was not an admission of wrongdoing in the past, but simply reflected changes in the global tax system as a result of a long-running debate on the way multinational companies are taxed.
