French gov 'plans to hand Google €1bn tax bill' - report
Getting sick of Dutch sandwiches and Irish doubles
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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"
COMMENTS
Re: Profit != Turnover
"Corporation tax should be paid, at a lower rate, on turnover, instead of profit"
What? So my company (which sells aeroplanes) has a turnover of 100Bn however, making aeroplanes is expensive so it costs me 99.5Bn to make them along with all my wages, etc. Profit is rather healthy at 500m though.
so you are saying I pay say 1% of 100Bn rather than 20% of 500m? Sure that will work, ive just gone into the red by a tune of 500m using your figures.
Err...
It's hardly fleecing Google to ask them to pay fair corporation tax and not engage in technically legal but actually immoral tax avoidance.
It's not like Google are using business equivalents of schemes such as ISAs to avoid paying tax, schemes setup and run by government and encouraged for use. They're spending millions of pounds at top accountancy firms to find technical legal loopholes to allow them to avoid paying vast amounts of money to the host countries who they are happy to make money from the population of.
Re: Profit != Turnover
Since Google seems to be so tragically unprofitable in the United Kingdom and France, perhaps we should do the kindest thing for them and nationalise their European divisions, fire all the executives (if they're unable to turn a profit on 1.4 billion turnover they're obviously incompetent) and run it as a public company until it can return to profitability. At which point, if Google asks nicely, we'll sell it back to them. How about it, Google?
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