Google prevails in $1.27B French back taxes case

Alphabet, Google’s parent company, won a major tax battle in France on Wednesday when a judge threw out the government’s case seeking $1.27 billion in back taxes.


The case is one of several pitting U.S. tech companies against regulators in the European Union over matters that include tax payments, antitrust violations and privacy.

In the French taxes case, the government argued Google was responsible for paying income and sales tax from 2005 to 2010. Google disputed the claim, saying it did not conduct the majority of its business in France, though French companies paid for advertising on the search site.
Instead, Google maintains it completed much of its sales work across the European Union from its headquarters in Ireland, which has much more lenient tax laws than other EU nations.

French authorities said the Irish office was a sham, and that Google employees in France were doing the bulk of the work in-country, making the profits subject to French taxes. The judge sided with Google, which said its French employees did preparatory work for French customers, but the sales and the bulk of the work were completed in Ireland, and were thus not subject to French tax laws under the terms of a tax treaty between the two countries.

“After a thorough review by the public rapporteur, the French administrative court of Paris has confirmed Google abides by French tax law and international standards. We remain committed to France and the growth of its digital economy,” a Google spokesperson said.

Google’s victory, which is subject to appeal, comes as various U.S. tech companies face increased scrutiny across Europe. Two weeks ago, the EU fined Google $2.7 billion for violating antitrust laws by using its search engine dominance to steer business to a subsidiary, one of three such antitrust cases Google faces there.

Spain is also pursuing a back-taxes case against Google, seeking payment of $349 million.

Regulators are also investigating whether Facebook violated EU privacy laws by the use of users’ personal data to boost advertising revenue. Germany recently passed a law that subjects social media companies to fines if they do not promptly remove posts promoting terrorism at the government’s discretion.

By Eric DuVall