Google will find out if it owes over €1.1bn in back taxes to France through using an Irish company, just days after it was slapped with a record competition fine by the EU.
Paris judges may rule today whether Alphabet’s Google illegally dodged French taxes by routing sales in the country out of Ireland. The case hinges on whether Google’s European headquarters in Ireland should be taxed as if it also has a permanent base in France.
“The backlash has been unrelenting because tax populism and Google-bashing are on the rise among certain politicians,” said Maximilien Jazani, a tax lawyer in Paris. The case could have “extremely harmful” side effects because any change in how tax law is interpreted would apply to all companies and could deter investment in France, he said.
Authorities across the continent have been trying to claim a slice of the billions of euro of profits Google’s owners kept out of their grasp using techniques known as the Double Irish and the Dutch Sandwich. To end a dispute spanning 14 years, it recently struck a €306m settlement with Italian tax authorities.
Last year, Alphabet also agreed to pay €130m in an accord with UK authorities for taxes going back to 2005 after facing sharp criticism for booking ad sales through Ireland to reduce liability.
Google representatives declined to comment on the French ruling. The company previously said it complies with French law and was cooperating fully with officials. The company got a boost last month when an adviser at the Paris administrative court delivered a non-binding opinion that Google should be let off the hook in part because of weaknesses in the legislation.
The French ruling follows the commission’s June 27 decision to levy a €2.4bn fine for systematically favouring its own price-comparison-shopping service in its general search results. The EU case is one of at least three targeting the search engine amid demands for action from politicians.
The search engine is also embroiled in a French criminal investigation covering a different time period that has also focused on the tax status of the company’s Irish unit in France.
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