On Tuesday, May 24th, French tax officials raided Google’s offices in Paris as part of an investigation into alleged tax evasion.
Close to one hundred police officers and twenty five data specialists stormed the location, claiming Google has failed to pay nearly £1.3 billion in taxes to the French government.
According to a The Guardian article
, “Prosecutors said they want to establish whether the Irish company through which Google funnels the majority of its European revenues does in fact control a “permanent establishment” in France.”
More specifically, the State Financial Prosecutor stated
that the “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 Prosecutor added
, “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.”
Source: BlackMac / Shutterstock.com
According to French taxation expert Antoine Colonna d'Istria in a CNBC article
, France tax authorities, by raiding Google’s Paris premises, “have clearly entered a second stage of the investigation, trying to gather information that they have not been able to get hold of in a normal inquiry.”
In an opinion piece in The Telegraph, however, Juliet Samuel, a former Wall Street Journal reporter, heavily criticized France’s decision to go after Google.
, “If France devoted the same level of energy towards improving its moribund economy as it does towards bashing innovative companies, it might increase its tax take more than it will by staging police raids. France needs to ask not just why and how Google is shifting its money around the world, but why France doesn’t have a Google of its own.”
On the other hand, Evan Rudowski, the Managing Partner for Atlantic Leap, a company that helps digital firms open offices abroad, said the move was primarily carried out for political purposes.
Taking into account French President Francois Hollande’s dipping popularity, Rudowski said
, “Hollande needs to think about reelection and there is no incentive for him to look the other way on this — it's politically smart for him to make a show of cracking down on this.”
In response to the raid, spokespeople for Google 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."
Cameron’s Google Tax Deal Returns
UK Prime Minister David Cameron, who recently signed off on a £130 million settlement with Google for back taxes owed, has been put back on the spotlight following Tuesday’s events.
During Wednesday’s Prime Minister Questions (PMQs), Shadow Business Secretary Angela Eagle questioned
Chancellor Osborne on Cameron’s Google tax deal.
"Given the overnight news of the French authorities' dawn raid on Google, investigating allegations of aggravated financial fraud and money laundering, do you now regret calling your cosy little tax deal with the same company 'good news for the British taxpayer'?," she said.
In response, Chancellor Osborne defended his administration’s work on tax evasion.
“We increased resources for the HMRC to tackle tax evasion and avoidance. We’ve introduced a diverted profits tax so companies like Google can’t shift their profits offshore anymore,” Osborne said
, adding that the government has “made sure that banks pay a higher tax bill than they ever did under the last Labour government.”
Still, in a letter to Cameron, Shadow Chancellor John McDonnell pressured the government to liaise with French tax authorities.
“With the spotlight back on Google’s tax affairs after ... [the] raid in Paris, will you reassure the British people that this government is serious about tackling tax avoidance by urgently getting in touch with the French authorities to find out if anything they’ve uncovered ... is relevant to any wrongdoing that could have taken place in the UK?,” he said
What are your thoughts on the raid? Do you agree with Samuel or Rudowski’s comments on the event?