Paris - France has reportedly handed Google a 1-billion euro tax bill after investigating its accounts.
Inspectors searched the company’s Paris offices in June 2011. Analysts estimate that Google’s revenues in France topped 1.4-billion euros that year.
However, the firm reported just £160-million of French revenue in 2012, according to court documents obtained by the country’s national news agency AFP. Google paid £5.4-million in tax on net profit of £6.9-million for the year.
Socialist France has some of the highest tax in the world, with the top rate of income tax currently 75 percent. Google has reduced the amount of tax it pays there by channelling its revenue through Holland and then Bermuda before reporting it in Ireland, which offers far lower tax rates.
Reports of the billion-euro claim emerged in France’s respected news magazine Le Point. The story has been followed up by the rest of the country’s media.
The Paris exchequer refused to comment, stating that tax affairs are confidential. A spokesman for Google also declined to comment.
Since Francois Hollande’s election in 2012, French unemployment has soared to 11 percent while the cost of living continues to spiral. In addition, figures released last week showed that foreign investment in France for 2013 – Mr Hollande’s first full year in power – was down 77 percent.
Faced with huge debts, the country is now determined to clamp down on multinational companies such as Google.
Last week the company announced record British earnings of £3.6-billion for last year – an increase of £600-million on 2012. The firm has yet to disclose how much corporation tax it will pay on its takings.
It is under enormous pressure to make a large contribution, following fierce criticism of its tax affairs in recent months. In October, it emerged that the firm paid HMRC just £11.6-million on income of £3-billion in 2012.
When Google’s bosses appeared in front of the House of Commons’s influential Public Accounts Committee, Margaret Hodge MP branded the company “calculated, unethical and evil”.
Mrs Hodge, the committee’s chairman, described Google’s tax bill as a “paltry sum”, adding: “I remain of the view that the government must engage in litigation to force Google to cough up.”
Experts warn, however, that despite a higher turnover, the corporation tax bill for Google’s British operation is likely to remain low because it too is based in Ireland.
“On the basis of Google’s global performance and the share of its profits in the UK we would expect it to pay more than £200-million a year in the UK,” said tax accountant Richard Murphy, who helped expose Starbucks’s tax-avoidance tactics.
“What we know is that for the last year it reported, Google declared it paid just £11-million. So the question is on the table – where are the missing millions?”
A Google spokesman said: “Like most multinationals we pay the bulk of our £1.2-billion corporate tax bill where our business originated – in our case the US. That’s a rate of more than 19 percent, roughly what a UK-based company would pay.
“We’re also a significant contributor to the UK economy, having created over 2 000 jobs. In 2013 alone we invested more than £300-million in property, and tax related to our UK operations totalled more than £150-million.” - Daily Mail