Google has agreed to pay close to €1bn to French authorities to settle a fiscal fraud probe which began four years ago in a deal that may create a legal precedent for other large tech companies in the country.
French investigators have been seeking to establish whether Google, whose European headquarters are in Dublin, failed to pay its dues to the state by avoiding to declare parts of its activities in the country.
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The settlement comprises a fine of €500m and additional taxes of €465m, Google said in a statement.
Google, part of Alphabet, pays little tax in most European countries because it reports almost all sales in Ireland. This is possible thanks to a loophole in international tax law but it hinges on staff in Dublin concluding all sales contracts.
“(The agreement allows) to settle once for all these past disputes,” said Antonin Levy, one of Google’s lawyers, at a hearing in a Paris court.
The combined tax payment is less than the €1.6bn the finance ministry had been seeking from Google after the company’s Paris offices were raided in 2016. At the time, the ministry had ruled out settling with the company.
Budget Minister Gerald Darmanin told ‘Le Figaro’ newspaper the settlement would create a legal precedent and added that talks were under way with several other firms.
European countries have struggled to tax the profits of multinational tech companies derived in their jurisdictions.
France has pushed hard for a digital tax to cover EU member states, but ran up against resistance from Ireland, Denmark, Sweden and Finland.
The French government has eventually imposed its own unilateral tax, prompting US President Donald Trump to brandish the menace of a retaliatory tax on French wine.
“We remain convinced a co-ordinated reform of the international tax system is the best way to provide a clear framework for companies operating worldwide,” Google said.
Reuters
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