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Google won't have to pay €1 billion tax in France - because its Irish subsidiary is not taxable there

A French court ruled in favour of the search engine giant today.

Image: Thierry Monasse DPA/PA Images

GOOGLE IS NOT liable for €1.115 billion in unpaid taxes claimed by the French state, a French court ruled today, saying the internet giant’s Irish subsidiary is not taxable in France.

“The French company Google Ireland Limited (GIL) is not taxable in France for the 2005 to 2010 period,” the court ruled.

Google paid just €6.7 million in corporate taxes in 2015 in France by booking revenues for its online empire at its European subsidiary in Ireland, which has a lower tax rate.

The group employs 700 people in France but advertising contracts for its search engine or video-sharing website YouTube are signed with its Irish subsidiary.

The French claim was the latest in a series against the California-based group, which faces mounting legal problems in the EU.

European action has become increasingly aggressive against US technology giants Amazon, Facebook and Apple as well as Google.

The EU hit Google with a record €2.4 billion fine on 27 June for abusing its dominant position in the search engine business and illegally favouring its own shopping service over rivals.

In 2016, European competition chief Margrethe Vestager shocked Washington and the world by ordering iPhone manufacturer Apple to repay €13 billion in back taxes in Ireland after paying a near-zero rate of tax some years.

Newly elected French President Emmanuel Macron promised to get tough on US internet giants during his campaign, seeing their low tax rates as a source of resentment about globalisation and unfair on European companies.

The government’s public accounts ministry said later today that it was weighing an appeal.

“The administration has two months to appeal these rulings and is already working to this end,” it said in a statement.

Economy Minister Bruno Le Maire had said Sunday: “It is time Europe got a grip and defended its interests, making Google, Amazon and Facebook pay the taxes they owe European taxpayers.”

The French claim was significantly higher than the amount Google agreed to pay Italian and British tax authorities over its tax arrangements with its Irish subsidiary.

In May, the group agreed to pay €306 million to Italian authorities. Last year, it struck a deal with Britain to pay £130 million (€170 million) for a decade of business, which was criticised at the time by opposition MPs as being too low.

The French claim was a fraction of the company’s annual profits: In April, Alphabet, Google’s parent company, declared a 29 percent jump in profit to $5.4 billion in the first quarter of 2017.

© AFP 2017

Read: Emails between Google and Uber show how the tech giants became enemies

Read: EU fines Google €2.4 billion for ‘abusing its market dominance’

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