Google's European problems continue as France demands $1.7 billion in back taxes

By midian182
Feb 25, 2016
Post New Reply
  1. Google seems to be having some trouble with Europe’s tax laws. Last month, it was reported that Italian police suspect the company has evaded 227 million euros ($247.5 million) in taxes between 2009 and 2013. Now, French authorities have demanded that the tech giant pays 1.6 billion euros ($1.7 billion) in back taxes it allegedly avoided by using complex financial arrangements.

    "As far as our country is concerned, back taxes concerning this company amount to 1.6 billion euros," an anonymous source at the French finance ministry said.

    The demand comes after Google reached an agreement with the UK government last month to pay back 3 percent in tax, or £130 million ($181 million). The amount, which covers money owed since 2005, was criticized for being “disproportionately small,” especially considering that the UK is Google’s second-largest market.

    French Finance Minister Michel Sapin has ruled out making a similar deal with Google, as he said the sums at stake in France were "far greater" than those in Britain, according to Reuters.

    Google CEO Sundar Pichai has defended the company’s tax practices. "We're a global company. We have to abide by tax laws everywhere, we do abide by local tax laws in every single country," he said. "We're advocating strongly for a simpler global tax system," he added.

    A number of US tech giants, including Apple, Microsoft, and Amazon, have come under fire from the European Commission for using a variety of methods to avoid standard tax rates across the continent. They often achieve this by basing their regional headquarters in countries such as Ireland, which has a much lower corporate tax rate than the rest of Europe. EU tax law states that companies don’t have to pay tax in a country where they don’t have a “permanent establishment.”

    "If governments don't like these laws they have the power to change them," a Google Spokeswoman said.

    Permalink to story.

  2. davislane1

    davislane1 TS Evangelist Posts: 3,384   +2,171

    What they did was legal. Don't want it to be legal, change the laws.

    That probably won't happen, though. The cronys would not approve.
  3. Darth Shiv

    Darth Shiv TS Evangelist Posts: 1,604   +370

    Yes standard problem. A profit seeking company will use ALL legal means to avoid paying taxes. It's just a fact. You want to enforce them to a moral standard, write it in law.

    Personally I think there should be a min tax on gross sales. That way if anyone purchases google products in your country, tax is collected in your country and they can do all the profit shifting they want. Also you should not be able to claim deductions on this if your turnover exceeds some threshold. Let the startups start but once you are rolling, you have to pay your taxes.
  4. davislane1

    davislane1 TS Evangelist Posts: 3,384   +2,171

    That would only annoy google and harm customers. Similar has been done in the U.S. with affiliate marketing programs. The result was big entities like Amazon paying state-specific taxes and smaller companies that only sell a handful of products pulling their programs from the applicable states.

    The only way to make the system "fair" is to adopt a flat % for everyone. That won't happen though. Too much money to be made in the current environment.
  5. Darth Shiv

    Darth Shiv TS Evangelist Posts: 1,604   +370

    We have a similar consumer tax in Australia that is flat across the board... the GST. I'd extend it to a higher % for large multinationals that shift profits. We have a list of companies that are being audited by Senate inquiry. I'd start with those.

    Really - who cares if it annoys them? If they are making extremely large profits here and shifting the profits overseas, they are welcome to leave. They are public companies - everyone knows how much profit they are making. If they are selling a product in our country to our citizens in stores in our country, they need to be paying their fair share of taxes. No sense crying that the tax man is closing their little tax dodge.

    Also we have fined mining companies in Australia for doing this very thing. Punitive punishment. Many mining companies are aborting profit shifting operations due to this. They get the message. Something is going to be done about the practice.
  6. 3% tax?!?
    What the f***. Thats an absolute joke.
    Now if I was self employed I'd love to see what they say if I'd only paid 3% tax. I don't see how they could legally punish me if corporations like that don't have to.
    Darth Shiv likes this.
  7. Armanian

    Armanian TS Rookie Posts: 37   +7

    Simple solution:

    Enforce all businesses in said country to operate a domain name for that country and enshrine in law that they pay tax for any sales on said domains. E.g. Google pays tax on all profit taken from the or such sites, same for every other country. As EU law specifies that they can only be taxed in the country they have permanent residence this should be expanded to include any country domain names.
  8. Hexic

    Hexic TS Addict Posts: 272   +127

    They are paying their fair share of taxes - that's the entire point. They ARE paying the taxes that the local government that they established their businesses overseas in. And, if one would carefully read the article, the entire EU agreed upon that law - the law that'll states it's legal for Google to pay the 3% tax that IRELAND chooses to have.

    I'm honestly perplexed at what is so confusing here - everything is legit. If you owned a company, would you move to a location (legally), with the lowest tax rates in that area, so you can keep more money for salaries, R&D, and global operations? Yes, you would.

    Read the laws, understand the laws, and it's quite easy to comprehend. If the EU wants to make more money from Google, they need to CHANGE THEIR OWN LAWS. Yeesh.
  9. Jibberish18

    Jibberish18 TS Guru Posts: 509   +35

    ""If governments don't like these laws they have the power to change them," a Google Spokeswoman said."

    Wow. I don't even know this chick and her remark makes me want to kick down the doors to her office and body slam her before cuffing her lol. I mean its true and all but still. Shameful. Funny thing is EVERY politician talks about this and how when they become president they're going to go after these companies and on and on and never do.
  10. Darth Shiv

    Darth Shiv TS Evangelist Posts: 1,604   +370

    You don't get it. Until these multinationals started doing this, the laws were not under this sort of scrutiny. It is a gap law makers did not intend. In other words, they never wanted Google, Apple etc doing this. It is not in the spirit of the law and those companies know this. They are trying behind a statement saying "Blah blah blah you left the gap in the laws for me to do this so I'll do it."

    Sorry but those massive companies get hit with massive backdated tax bills and punitive penalties (which as I already cited has occurred for other companies already), it is pretty damn obvious they were never meant to be doing this AND they knew it.

    So in this case, legit has NOTHING to do with it unless you want to bury your head in the sand. A govt can rightfully say here's a legit backdate of the tax we expect you to pay or you can get out of our country.


    And here is a federal bill to fine companies doing this:
    Raoul Duke likes this.
  11. Darth Shiv

    Darth Shiv TS Evangelist Posts: 1,604   +370

    Sorry for the strong stand but the thinking that "because we are legally allowed to do this, we will" rubbish ticks me off. They KNOW they are dodging taxes. They are using legal loopholes. Well, guess what? Govts are saying we know you are dodging our taxes so we are going to punish you - we have the strength to do so.

    If only the Govt took this stand more in society in general. Same thing for net neutrality. Same thing for monopolies. This is why regulation is required in society. Because without it, making money takes precedence over decency.
    Raoul Duke likes this.
  12. Badvok

    Badvok TS Booster Posts: 118   +47

    I think that is called VAT in the UK?
  13. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 6,349   +1,945

    "If governments don't like these laws they have the power to change them"
    Spoken like a true spokeswoman. She's missing her calling in life, it looks like she'll be right at home in politics where politicians can speak all the time but yet never say anything.
    Darth Shiv likes this.
  14. 3volv3d

    3volv3d TS Booster Posts: 121   +49

    I get that it was a loophole, and probably morally not right, but like others said, change the laws, which, it isn't that they won't change the laws, it is that, the EU is a s**tshow. With the UK being the most butt hurt by the crappy laws and rules they do have in place, which is why the UK need to get the fudge out.

    But... France... the country known for surrending, won't give up this fight ? Free money / Missing taxes has them up in arms ? I guess most governments would be. In the papers in England you will read about the MP's (members of the puppetshow) didn't think our deal with google was enough, £50 and pack of NICE biscuits.
    ... they are actually called nice, sprinklin of sugar, great for dipping in tea, but usually end up at the bottom of your cup. FYI you want a Choclate hob nob. Built to withstand a dipping, but I digress.

    England bent over instantly for the small hand out from Googleywoogley proving just how screwed the UK has gotten. France clearly sees $ signs.

    Don't these loopholes need to stop ? You can defend these big corps however you like, but the problem is they take for example this 1.7 billion in taxes which should be put to use in schools and hospitals etc. Helping children get smarter, sick get better, keep the cogs turning.

    Of course it will just be 1.7 billion in funds for backhanders, lobbying and other useless BS that the governments dream up because all these people with money and power only think how to keep them and their buddies rich, and the rest of us paying the taxes for them, picking up the tab, which they use their lawyers to avoid.
  15. Camikazi

    Camikazi TS Maniac Posts: 798   +217

    Since when has the spirit of the law ever been important? When it comes to lawyers and courts it's the letter that matters not the spirit, that is why laws are written how they are in vast amounts of very specific and technical detail. The whole problem here is that no laws have actually been broken so Google has done nothing wrong as far as the courts go, they saw how they could use the laws in their favor and did it. Most people with enough money to have the right lawyers do the same thing because, why not, it's legally there to be done. It is up to the law makers to make sure things like this does not happen and to patch them when it does happen.
  16. Larrymrsmith

    Larrymrsmith TS Rookie

    It is time Google calls France's bluff and withdraws all services from the country. This my spark an new revolution(not kidding).
  17. Larrymrsmith

    Larrymrsmith TS Rookie

    You can become a corporation if you like. Seriously, that you are not is your fault.
  18. Raoul Duke

    Raoul Duke TS Guru Posts: 861   +309

    I think it has always been important, but you are absolutely correct when you say judges only care about the letter of the law, but it does bother me that in cases where they have the ability to set a precedent, they don't have the cohones to.
    I am not sure legislators, who are busy, anticipated this. It can end up in a vicious cycle of laws passed, loopholes found and exploited, laws amended, new loopholes found etc.
    In my country which is a parliamentary democracy/constitutional monarchy (Canada, but we have this exact same problem) do you know the time, effort and work it takes to make/change the law? A member of parliament has to write and submit a bill to parliament so it can be debated, this can take a considerable time. Then it goes to the Senate for a further look and more debate and can get passed back to parliament for revision, back to the Senate etc. With politics being so partisan often bills fail not because they lack merit, but because they are proposed by the other party. If it does get through, it goes back to parliament where it gets assent by the Governor General and becomes law. Personally I think they have better things to do than get caught in this roundabout.
    As someone suggested it might be much simpler to get rid of much of the legislation and impose a flat tax on corporations. I recall an instance (I think it was actually Russia) that did this and imposed only 13% flat tax and found that their corporate tax revenue increased incredibly above expectations.
    The amount of money we are talking about here is billions, likely more than my country’s upcoming annual deficit. This is money that could be helping to pay for the services you use, infrastructure, education, healthcare (at least in this country) etc.
  19. Darth Shiv

    Darth Shiv TS Evangelist Posts: 1,604   +370

    There are loopholes then there are these loopholes. Clearly no government meant billions of dollars of turnover to result in profits being written on a book overseas instead of the actual country the profits were made. If that were the case, we'd see governments encouraging the practice. But we don't. And if ever there was a place that the spirit of the law would apply, it would be to federal taxes. Why do you ask? Well because the Govt sets the laws. If you do something dodgy, they can retrospectively smack you for it. Hopefully with a lot of punitive damages as well.
    Raoul Duke likes this.
  20. Sounds like a plan.

    They said I could be anything, so I became a corporation.
  21. Technician

    Technician TS Addict Posts: 677   +113

    Lol, they can pull that out of petty cash.
  22. Hexic

    Hexic TS Addict Posts: 272   +127

    *sigh* - keep blaming the corporations for the governments not keeping up on their own laws, sound strategy. They don't like the gap law, that's clear. They probably should have witnessed the writing on the wall years ago and saved themselves billions. But let's charge the corporations for doing what a corporation is meant to do (make money), and ignore the obvious oversight of the [lack of] standard government efficiency.

    Yay, capitalism.
  23. pedro0923

    pedro0923 TS Rookie

    Muy bueno
  24. Technician

    Technician TS Addict Posts: 677   +113

    What is? The tax bill or the comments?
  25. romainB

    romainB TS Rookie Posts: 30

    It's only a matter of time ti'll they build a new country Googlendia and establish their own laws.

Similar Topics

Add New Comment

You need to be a member to leave a comment. Join thousands of tech enthusiasts and participate.
TechSpot Account You may also...