Why was Google's office in Paris raided?
Google's troubles in France appear to be on the rise.
Just a few days after the Silicon Valley company appealed France鈥檚 highest court鈥檚聽, the company鈥檚 offices were raided by French prosecutors and police over allegations of 鈥渁ggravated tax fraud鈥� and money laundering, authorities said Tuesday.
So-called tax optimization methods are common among giant tech companies, including Apple, Amazon, Facebook, and others. Most of these companies base their European subsidiaries in low-tax jurisdictions. The cost center for Google鈥檚 European Headquarters, Google Ireland Holdings, for example, is where corporate tax doesn鈥檛 exist. Google Ireland Limited, which is based in Ireland, is owned by Google Ireland Holdings, and pays its billions of royalties to the latter in order to lower its tax rate, according to TechCrunch. 聽
All these dealing aren鈥檛 illegal, and Google doesn鈥檛 conceal its use of such tactics, which are also used by other tech companies. Still, the companies are increasingly facing scrutiny for their 鈥渁ggressive鈥� tax optimization methods.
In France, authorities are accusing Google of not disclosing all the information about its dealings in the country. French authorities say that despite Google鈥檚 claim that its employees provide only聽support and don鈥檛 sign contracts in France, the company鈥檚 sales employees are based in France, and have in fact, they say, signed contracts with French clients. In addition, authorities say that some of the contracts are written in French and 鈥渁nd聽,鈥� which means the contracts are considered French under French law.
鈥淭he investigation is aimed at finding out whether Google Ireland Ltd.聽 and if, by not declaring some of its activity on French soil, it has failed to meet its fiscal obligations, in particular with regard to corporation tax and value added tax,鈥� the prosecutor鈥檚 office said in a statement obtained by the Associated Press.
The company now faces up to 1.6 billion euros (about $1.76 billion) in fines.
But Google has denied the claims saying that it abides by the rules of the countries in which it operates.聽鈥淲e comply with French law and are cooperating fully with the authorities to answer their questions," a Google spokesman told Mashable.
This isn鈥檛 the first time that Google has come under scrutiny in Europe. Last January, the tech company reached a deal with the British government to pay about $185 million that it has owed in taxes since 2005. According to the UK government, Google made $18 billion in UK revenue between 2006 and 2011,聽, Engadget reported.
And Google isn鈥檛 the only company that has come under scrutiny in Europe. Last December Apple, reached a deal with Italy鈥檚 fiscal agency聽, following accusations that the company was underpaying its taxes. The Italian authorities claimed that Apple had failed to pay up to $900 million in taxes between 2008 to 2013.
The European Union recently initiated a plan that will require all the tech companies聽in the region. A report by the commission estimated that the EU to corporate tax avoidance.
