France has no intentions of backing down on Google taxes, French finance minister Michel Sapin confirmed, after French tax authorities raided the Parisian offices of the Silicon Valley search giant last week.
Sapin said he didn’t “do deals like Britain” but would follow the letter of the law, taxing Google the maximum amount owed. “We’ll go all the way. There could be other cases,” he told European journalists on Sunday.
French authorities are said to be pursuing some €1.6bn (£1.2bn) in corporation tax and VAT from Google, after the Californian company paid just €5m of taxes in France on €225.4m revenues in 2014.
The early morning raid was part of a tax fraud investigation probing whether Google has been evading French corporation tax by channelling its profits through its Irish headquarters and laundering the proceeds. If found guilty, Google will face fines of up to €10m (£7.60m) or half of the value of the laundered amount involved.
Analysis of data seized could take years, French financial prosecutor Eliane Houlette told French media. “We need to analyse (the data) … (it will take) months, I hope that it won’t be several years, but we are very limited in resources”.
A Google spokesman said: “”We comply with the tax law in France, as in every other country in which we operate. We are cooperating fully with the authorities in Paris to answer their questions, as always.”
The probe, which was started by tax authorities three or four years ago according to Sapin, comes mere months after Google paid £130m in back taxes to the UK government after a six-year HMRC investigation. The Labour party criticised the agreement, calling it “derisory” and a “sweetheart deal.”
“There won’t be negotiations,” Sapin said, striking off the possibility of a similar tax deal with the massive corporation. In February, Sapin said that the sum Google will have to pay French tax authorities will be “way bigger” than its UK settlement.
This increased scrutiny comes amid increasing European pressure on US multinationals to pay more tax, including a separate tax raid on McDonald’s French headquarters on May 18 . French media has reported that the fast food giant has been asked to pay €300m worth of unpaid French taxes that were diverted through Luxembourg and Switzerland.
Late last year, iPhone giant Apple agreed to pay a €318m back tax settlement to the Italian authorities and Google’s Paris office saw a similar tax raid back in 2011. .
Google is currently weathering several regulatory setbacks in Europe, including demands from the French government to apply the so-called “right to be forgotten” globally, rather than just within the EU. Google has appealed the demand, and the associated €100,000 (£75,000) fine applied by French data regulator CNIL. Its mobile software Android also faces a competition investigation by the European Commission.