French authorities raid Google's Paris HQ over tax allegations

Google's office in central Paris was raided this morning by police, directed by French financial officials, over alleged underpayment of taxes. More than 100 investigators and five magistrates were involved in the raid, which happened shortly after 5am on Tuesday morning, Reuters reported. This has been confirmed to The …

[The Axe]

OxFam are dodgy with their tax affairs too

OxFam aren't squeeky clean over their handling of tax either. They use dodgy methods to get as much money as possible, using techniques that could be seen as evasion if HMRC got off their arse and decided that it wasn't what Parliament wanted when the laws were written. See how they handle GiftAid on donations of non-cash items. Plus they don't really spend that much on the needy, keeping a load for themselves to pay the high salaries of their executives.

[David 132]

Re: OxFam are dodgy with their tax affairs too

indeed. Given their own practices, it's a little hypocritical of Oxfam to complain.

There's a good article here about it:

http://www.iea.org.uk/blog/oxfam-on-tax-avoidance-do-as-i-say-not-as-i-do

Hey, Oxfam? Voluntarily surrender a greater proportion of your turnover to HMRC than is required (because, obviously, keeping that money for yourself is only something EVIL TORIES would do)... then I'll, maybe, start listening to your posturing on the subject.

[Aristotles slow and dimwitted horse]

Hmmm... Oxfam????

We just need to be clear that the use of the word "charity" is these days, for companies like Oxfam and Scope etc. just a banner for them to squirrel and retain a lot of money.

Take away the smokescreen of them being "registered charities" and all of the emotive blur that goes with the term, and you will find that they are for all intents and purposes multi-multi million pound businesses with all of the structure etc of other multi-multi million pound businesses.

I'm not suggesting that they do no good with their money, but I think they all need tighter scrutiny seeing the amounts they squander, and that the CEOs get paid.

[Triggerfish]

Re: Hmmm... Oxfam????

I have to agree here, the Salvation Army for example, the fact the person running it gets only a average UK wage which is pretty laudable, shame about the fact they have other things they can be criticised on but thats pretty good.

[Anonymous Coward]

Google doesn't have sales in France

It has sales in Ireland. Those people with "sales" on their business cards in Paris? They're "evangelists" who refer customers to the salespeople in Dublin for the actual sale. Or at least that's what the tax lawyers say. There isn't any revenue-generating engineering going on in Paris - the Cultural Institute is basically a charity.

I'm not stating an opinon on whether what Google is doing is ethical. However, it does appear to be legal. If there's a mismatch between what is ethical and what is legal, that needs to be fixed in a fair way by closing loopholes, rather than going after a few large targets that get a lot of publicity (and, preferably, are foreign-owned). But that would be much more difficult.

[Pseu Donyme]

Re: Google doesn't have sales in France

> ... it does appear to be legal.

Presumably the French authorities disagree (hence the raid at dawn).

[ratfox]

Re: Google doesn't have sales in France

Presumably the French authorities disagree (hence the raid at dawn).

That doesn't make sense. Google is doing this selling from Ireland publicly and openly. If the French thought that this was illegal, they could just fine them, and use Google's own declarations as proof.

A raid at dawn is only useful if you think they are hiding something. The only logical assumption is that the French think that Google is lying, and is actually secretly selling stuff from their French office. They're hoping to find proof of contract negotiations, or something like that.

Or possibly, it's just an intimidation tactic.

[Anonymous Coward]

Re: Google doesn't have sales in France

At the end of the day it comes down to what "selling" actually is. Google is attempting to imply that the terms "sales activity" is subjective, when in fact most people (and in France, importantly, probably most Magistrates) would assert that it is not subjective at all. And it's no good getting all US-corporate lawyer-ish in France either.

Furthermore, I think that because of the way the European treaties are structured, if the French do find that Google's practises have broken the law, a French guilty finding would set a pan-European precedent. Ouch.

Short Termism Strikes Again

Google spouting on about having to maximise shareholder value as a justification for this sales practise is bollocks. Share holder value has to be maximised in the long run, not just the short run. In deciding to operate in this way the question "can we get away with it" must surely have come up and been assessed. We may be about to find out whether that assessment was correct, or not.

If not, and that assessment was in anyway "dishonest" (i.e. over confident, lacking in input from experienced legal advisers, not asking European governments what they thought, etc) then Google's board might find themselves in trouble legally, and personally, with their American shareholders. Google's shareholders losing many many Billions in European fines cannot go unexplained by Google's board, and their explanation will have to be a whole lot better than "Well, everyone else does it too".

[John Brown (no body)]

Re: Google doesn't have sales in France

"They're hoping to find proof of contract negotiations, or something like that."

I'd bet that that is exactly the sort of thing they are after. Google and others are almost certainly doing the final "sign off on the deal" bit in Ireland, but "sales" means a lot more work up front than just the final sign-off. It looks like the French are looking for evidence that a significant proportion of the sales process is actually happening in France.

[jonathanb]

Re: Google doesn't have sales in France

If Google Ireland hired an external marketing agency in France to bring business to them, they would have to pay for it, probably a commission based on the sales leads they generate. Google France should expect to earn the same amount of money as a third party.

[Uffish]

Re: Google doesn't have sales in France

... and France isn't going to inconvenience the "innocent until definitively proven guilty Google" one little bit, non M'sieur, croyez-moi!

Et gare au cochons volants.

[sysconfig]

Two extremes

Not sure if a full on raid is appropriate as I haven't got a clue about taxes paid or not paid in France, or their laws for that matter. But it's interesting to see how far authorities go there, while over here you can just have back room deals which allow a global player to pay far less in taxes than most some SMEs have to cough up.

[Version 1.0]

SOP

Realistically isn't this what we all do? Who likes paying taxes? I agree that they are necessary and I pay mine but I'm never exactly pleased about it. However I do like the things that taxes get me - clean water, a cop when needed and a sewage system that works (most of the time).

Up vote me if you agree.

Down vote if you've ever written to the taxman to complain that you want to pay more taxes.

[Dr_N]

Re: SOP

"Realistically isn't this what we all do?"

No.

If you, as a private person in France, tried to pull off what Google does then you'd end up with a big fine and possibly jail time.

[Anonymous Coward]

Re: SOP

If you, as a private person in France, tried to pull off what Google does then you'd end up with a big fine and possibly jail time.

If you had a comparable income the French authorities would do what every other government does and help you avoid tax, to ensure you didn't take all the money elsewhere and pay some other government instead.

[tom dial]

Re: SOP

A private person in France who tries to comply with the letter of French law while minimizing tax liability would end up with a big fine and possibly jail time?

And here I thought for years that France was a country of laws, where both government and citizens largely complied.

[Dr_N]

Re: SOP

"A private person in France who tries to comply with the letter of French law while minimizing tax liability would end up with a big fine and possibly jail time?"

Don't be obtuse.

A person who hides their income in another country, in undeclared bank accounts, would get stomped on by le Fisc.

Did you know that off-duty tax inspectors cruise around Cannes during the festival noting down French registered luxury/super cars to try and get "evidence" on potential tax dodgers?

[David 132]

Re: SOP

I agree (and have upvoted you) but at time of writing this I'm in a 1-4 minority.

Presumably, the downvoters have never had an ISA, or a pension fund, or taken advantage of tax deductions after donating to charity or when filing a tax return. All of those and many more are perfectly legal tax avoidance measures. I assume also that the downvoters are paragons of moral rectitude who have never paid a tradesman in cash and have scrupulously reported every single one of their eBay sales to the tax authorities - because those are examples of tax EVASION, and are the sort of thing we're all supposed to froth about.

[Anonymous Coward]

Re: SOP

Most people will not have taken advantage of tax deductions after charity donation / filling in a tax return.

Great swathes of the population on PAYE, do not hit higher rate tax band, have no complex investments & never go near filling in a tax return.

I give reasonable amounts to charity but it has zero effect on the tax I pay (the charities benefit from gift aid, but as someone who does not fill in a tax return I do not claim any back).

So I "overpay" tax, but I'm OK with that situation, tax system all part of maintaining society.

I would only be ensuring I paid no extra tax if I was massively struggling to make ends meet and thus every quid mattered, though the grim irony in the UK is that those that most enthusiastically try to avoid paying tax are usually those with plenty of cash.

[NotBob]

Re: SOP

Help me understand here. Is it normal in European countries not to fill out a tax return? We have to fill out returns even if we don't owe any taxes. There's even a check box (IIRC) for if the person filing the return is dead...

[JimC]

Re: SOP

> Is it normal in European countries not to fill out a tax return?

In the UK many, possibly the majority of people don't need to fill out a tax return. Tax is deducted at source for certain types of saving, and by your employer before you are paid. For people with simple lives they may pay a few quid more tax than they might be able to cut it down to, but still far better than paying an accountant or facing the job yourself.

[jonathanb]

Re: SOP

In the UK, if all your income has UK tax deducted at source, and your total income is less than £100,000, you don't have to file a tax return. You are also allowed up to £300 of foreign dividends without having to complete a tax return, this was introduced because lots of people have shares in Santander, a Spanish bank that took over two demutualised building societies that gave people free shares when they converted to banks.

[User McUser]

Re: SOP

Realistically isn't this what we all do?

You pretend that you're an Irish citizen in order to reduce your taxable income in other countries?

Corporations have a much easier time dodging taxes because they can use shell companies and other accounting shenanigans to shift numbers between different columns on the spreadsheet until they sum to zero or whatever numbers suit them at the time.

[Anonymous Coward]

@Version

I downvoted you also, but for completely different reasons...

A lot, if not most, governments have been privatizing several of their activities and let commercial companies deal with the aftermath. So basically; things which used to be provided by the government (and paid for from our tax money) now turned into a commercial undertaking and we had to pay for their services.

With one small detail: the amount of taxes people got to pay basically remained the same. Effectively meaning that we started paying the same amount of taxes while the government suddenly did much less for us in return than they used to.

And this happened in several European countries.

So yah, there's a little more to that story than simply "I pay taxes to help the government help me".

[Frumious Bandersnatch]

財閥？ (zaibatsu)

Isn't that like a Chaebol in Korea---a family run business? I think the right word is 'keiretsu' (系列).

[Alexander J. Martin]

Re: 財閥？ (zaibatsu)

While indirectly a reference to the Japanese family-run businesses, the use of zaibatsu is here more directly a nod to the mega-corporations with, er, questionable ethical commitments that prominently feature in William Gibson's fiction and related works in the ouevre, like the Cyberpunk 2020 game.

[Scott Broukell]

Le President François HoldOn just trying to garner some support for his party, especially given the apparent weakening of workers rights recently. The Frogs might have scoffed at the admittedly paltry sum the UK gov got out of Google recently, but I can't see them doing much better - the problem needs complete and utter global cooperation - never before witnessed, ever, anywhere, any time.

[Frank N. Stein]

Huh??

Who raids a companies office at 5am, before they are even open?

[ratfox]

Re: Huh??

I suppose the point is to prevent the employees from shredding or burning incriminating evidence. Or more likely in this case, deleting files.

Google probably keeps all its documents in the cloud, but who knows? Maybe The French police will come up with a smoking gun.

[Blue Pumpkin]

Re: Huh??

In the cloud .. you must be joking ... you have never had to deal with the French taxman.

Everything has to be available as hardcopy for umpteen years - or else another 'fine' opportunity - often in dodecaplicate and stamped by some other government authority whose office is only open between 10 - 11am on the 4th Tuesday of the month if it has an R in it ... and no you can't email it

Having recently had to deal with French govt and financial institutions again, I had forgotten just how bad and bureaucratic everything is .... UK is a paragon of efficiency and helpfulness in comparison

[Dr_N]

Re: Huh??

"In the cloud .. you must be joking ... you have never had to deal with the French taxman."

It's all been done on line for years in France.

And quite easy.

Also not a uk.gov IT project so it all actually works.

[Uffish]

Re: Huh??

Have you seen Paris traffic at 9 a.m.

[NotBob]

Re: Huh??

Hence the 5am raid, dodge the traffic

[macjules]

Re: Huh??

Might be because they can then get back to the office and get petrol before the queues start? France's refinery workers are on strike .. well, someone in France has to be.

[tiln]

Faxes

I hope Google has enough working fax machines to submit their official documents.

Paris...

[Tim Roberts 1]

this is the essence ...

of international tax dodging by multinatiobnals. And I point no finger at Google because they are not alone.

[Schlimnitz]

I guess they could have had an insider tip-off.