The search engine's tax affairs have come under further scrutiny following a dawn raid on its Paris offices
GOOGLE’S tax affairs have come under further scrutiny following a dawn raid of the search engine’s Paris offices by French authorities over allegations of money laundering and “acts of aggravated financial fraud”.
Reports suggest that Google’s French headquarters was raided by around 100 tax investigators in the early hours of 24 May, as officers searched for evidence of money laundering and financial crime.
The raids form part of an inquiry into whether Google shifted revenue to Ireland, where the corporation tax rate is 12.5%, in order to avoid French taxes.
In a statement, France’s state financial prosecutor (PNF) said: “These searches form part of a preliminary enquiry opened on 16 June 2015 relating to acts of aggravated financial fraud and organised laundering of aggravated financial fraud, following a complaint from the French tax authorities.
“The enquiry is focused on verifying whether the company Google Ireland Ltd controls a permanent establishment in France and if, by not declaring a part of the activities conducted on French territory, it has failed in its fiscal obligations, notably regarding taxes on companies and value-added tax.”
In a company statement Google said: “We comply with French law and are cooperating fully with the authorities to answer their questions.”
In January, Google sealed a controversial £130m agreement over its back taxes from 2005-2015 with HMRC. The settlement was condemned by a number of tax experts and political figures, with shadow chancellor John McDonnell labelling the agreement a ‘sweetheart deal’, while accusations emerged of Google only paying 3% tax in the UK.
French MEP Eva Joly demanded that chancellor George Osborne should be dragged into a European Parliamentary Committee to explain the deal brokered between HMRC and Google, while the EU’s competition commissioner Margrethe Vestager opened the door to a potential investigation into Google’s tax dealings.
Just weeks after the HMRC deal, France reportedly demanded that Google should pay its tax authorities £1.3bn in back taxes, ten times the amount that the UK received from the search engine.
The Public Accounts Committee, which conducted an inquiry into the UK Google deal in February, said regarding France’s demands: “We expect HMRC to monitor the outcome of other tax authorities’ investigations into Google and reopen its settlement with Google if relevant new evidence becomes available”.