Google has dismissed French claims that it uses Ireland as a tax haven, saying its presence in Dublin amounts to “more than simply a letter box”.
The web giant’s tax arrangements are facing intense scrutiny in Paris, where the company is under pressure over the relationship between its French subsidiary and its European headquarters in Ireland.
French tax officials suspect Google’s French arm of selling advertising to major French clients while declaring revenue from such activities in Ireland, where the corporate tax rate is lower. Police working on the inquiry carried out raids at four Paris addresses linked to Google last year, though the company insists it complies with tax laws in France and Ireland.
In Google France’s first public comments since the controversy was revived with news of the raids, its senior policy manager, Alexandra Laferrière, stressed that the US tech giant invested heavily in France and Ireland.
“The Google headquarters (for Europe, the Middle East and Africa) is based in Dublin, and it’s more than simply a letter box,” she said at a conference organised by NPA Conseil, a consulting firm in Paris.
“The organisational structure means that commercial activities are based in Dublin.”
Google’s tax arrangements are such that while the company generated €1.25-€1.4 billion in revenue in France last year, according to estimates, it paid just over €5 million in tax to the French exchequer. The discrepancy has long been a source of tension between the California-based firm and French governments. However, Ms Laferrière said Google’s contribution to the French economy was wider than its tax filings. “Google invests hugely in France – €150 million has already been invested. There’s a contribution to the French ecosystem through support for SMEs and start-ups, and also the European Cultural Institute,” she added.
The French digital economy minister, Fleur Pellerin, said she would not comment on the inquiry into Google’s tax affairs.
Defusing the row
Seeking to take some heat out of the row, however, she said: “Nobody is designating a company such as Google as the devil.” She said there was a wider global discussion about “the mechanisms of tax optimisation which allow certain companies . . . to not pay corporate tax on their global profits or to pay only a small share”.
Court documents seen by The Irish Times show that Google twice took legal action over raids on its premises on June 20th, 2011, arguing they were disproportionate and underhand, but these claims were rejected by the Paris court of appeals. The court found that “the notion of independence” suggested in a contract between Google Ireland Ltd and Google France Ltd “does not correspond with reality”.
The investigative newspaper Le Canard Enchaîné reported last month that the tax authorities had made a €1 billion claim against Google, but the company denied this.
The issue has caught the attention, too, of Germany’s Der Spiegel magazine. In a three-page spread, titled “Sandwich from Holland”, it examined the double Dutch and double Irish tax-efficient models of Google, through its Irish operations – and other US multinationals.
It reports that finance minister Wolfgang Schäuble is determined to push ahead with EU measures to tackle the practice.
“Together with his colleagues from France and Britain, he wants to apply pressure,” the magazine said, noting a recent statement by Mr Schäuble and George Osborne at the G20 meeting in Mexico.
“By the time of the next meeting in February in St Petersburg, a first bundle of measures should be worked through to dampen the tax drainage.”
