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French gov 'plans to hand Google €1bn tax bill' - report

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The French tax office will be handing Google a €1bn tax bill to make up for revenues from France routed through Google Ireland, claims French weekly Le Canard Enchaîné*.

An inquiry into Google's Transfer Pricing - how profits and revenues are moved across borders by the corporation - has just finished and according to Le Canard, which does not reveal the source of the figure, the French government will be be demanding around a billion euros from Google France. The article in Le Canard was quoted in French daily Le Monde, which calculated that Google France paid only €5m in corporation tax to the French government in 2011 on a turnover of approx €1.4bn.

Apparently French President Francois Hollande raised the question of the tax sting at his meeting with Google chief Eric Schmidt on Monday.

In the UK, an MP slammed Google as immoral for paying £6m in tax in 2011 on a turnover of £395m.

Most of Google's revenue in Europe is sent to Ireland, where the tax is declared, and is then routed to the Netherlands and then transferred to Bermuda, where Google Ireland is officially located. Bermuda is a country with no corporation tax.

These manoeuvres are referred to by tax lawyers as a "Dutch sandwich" and an "Irish double".

The tax spat comes in the context of a longer running dispute between France's new socialist government, led by Francois Hollande and Google, in which the French government is threatening to make Google pay to cite news articles.

The idea is to support French media organisations which are struggling to recoup the ad content lost to The Chocolate Factory.

We've asked Google UK for a statement on their position, but have had no response. ®

Bootnote

*Le Canard Enchaîné is a satirical newspaper famous for its many investigative reports and political cartoons - along the lines of Blighty's Private Eye. You won't find it online - except for a landing page that basically says: "Go and buy the paper"

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