FRENCH TAX officials investigating links between Google’s French arm and its European head office in Dublin seized files during police raids at four Paris addresses linked to the company.
Court documents seen by The Irish Times show French authorities are inquiring into Google’s tax status and suspect the firm’s French subsidiary may be selling online advertising to major French clients without declaring the activity.
Google, which declares its European profits in Ireland, insists that all its advertising in the region is handled by staff based in Dublin and that Google France’s work is limited to “marketing assistance and service support”.
The arrangement means that while Google generated between €1.25 and €1.4 billion in revenue in France last year, according to estimates, it paid just over €5 million in corporate tax to the French exchequer.
The documents show that Google twice took legal action over raids on its premises on June 30th, 2011, arguing they were disproportionate and “underhand”, but these claims were rejected by the Paris court of appeals in separate rulings in May and August this year. The court found that “the notion of independence” suggested in a contract between Google Ireland Ltd and Google France Ltd “does not correspond with reality”.
The French tax authorities claim Google Ireland operates in France “using the human and material resources” of Google’s French subsidiary, but that it has failed to declare this activity for tax purposes. The authorities’ “presumption of fraud” rested on “the fact that employees of Google France appear to be in charge of the negotiation and management... of the portfolio of ‘big accounts’ for the Irish-registered company”, the court noted.
Google rejected the French claims in court, arguing that officials drew “erroneous conclusions” and that the evidence produced “does not in any way establish any presumption of fraud”.
Last night, a Google spokesperson said: “We have and will continue to co-operate with the authorities in France.”
