Google pays €1bn to French authorities to settle tax-dodging claims

Google to pay France €465m in back taxes and a fine of €500m - a long way short of the €1.6bn France's finance ministry had demanded

Google is to pay €965 million to the French authorities over claims that it underpaid corporate taxes. The investigation was started in 2016, with the authorities in France arguing that the company, with its European headquarters in Ireland, had failed to declare all of its business activities to the French state and had, therefore, evaded corporate taxes.

However, the sum falls well short of the €1.6 billion that the France's Ministry of Public Action and Accounts had been demanding following a high-profile raid on the company's offices in 2016. Furthermore, the sum has been split into two: just €465 million in back taxes, together with a fine of €500 million.

The best way to provide a clear framework for companies that operate around the world is co-ordinated reform of the international tax system

"We have now settled tax and related disputes in France that have persisted for many years," a Google spokesperson said in a statement. "The settlements comprise a €500m payment that was ordered today by a French court, as well as €465m in additional taxes that we had agreed to pay, and that has been substantially reflected in our prior financial results.

"We continue to believe that the best way to provide a clear framework for companies that operate around the world is co-ordinated reform of the international tax system."

According to Reuters, the dispute centred upon a loophole in EU tax law that enables Google to report its sales in low-tax Ireland by simply having staff in Dublin concluding all sales contracts.

France's Le Figaro newspaper also quoted the French finance minister, Gerald Darmanin, saying that the country's finance ministry is also in talks with a number of other companies that have run similar tax minimisation strategies to Google.

Google's settlement comes two months after the French government passed its own bill to tax global technology companies operating within the country.

Under the bill, digital companies with more than €750 million in global revenue and €25 million in French revenue will be required to pay a per cent tax on total annual revenue generated by providing services to French users.