A Paris court has thrown out the 1.11 billion euros ($1.27 billion) tax bill that France’s tax authorities were demanding from Google — although the French government has said it will appeal the decision.
The verdict could potentially have implications for Apple, which has also found itself on the receiving end of a costly tax bill in the E.U.
The money in question relates to Google’s activities in France between 2005 and 2010, related to ads sold in the country.
However, despite the French government arguing that the revenue was generated in France and therefore subject to French taxes, Google disagreed. Much like Apple, Google runs parts of its business (including ads) through Ireland, with its French company reportedly only handling minor services.
It seems that this argument won over Paris’s administrative tribunal, who ruled that Google’s lucrative ad business doesn’t need to pay income or sales taxes on advertising income from French clients.
Earlier today, the French government said it plans to appeal the decision. “We will appeal this judgment in defence of the interests of the state,” budget minister Gerald Darmanin said in answer to a parliamentary question.
Running afoul of the E.U.
This isn’t the first time Google or other tech giants have run afoul of E.U. authorities. Recently, Google was fined 2.4 billion euros ($2.7 billion) by European Union regulators for reportedly skewing its search results in a way that hurts smaller shopping search services.
In addition to the massive fine, Google has been told that if it doesn’t stop its “illegal” suppression of rival price comparison services within 90 days, the European Commission will fine it up to 5 percent of its daily revenue.
While this week’s announcement certainly doesn’t resolve all Google’s issues in Europe, it could have significant precedent-setting impact for other companies. Back in 2016, Apple was fined a massive 13 billion euros ($14.52 billion) bill for unpaid back taxes in the Republic of Ireland.
The ruling — which Apple has since continued to battle — stated that the company was taking advantage of illegal state aid that allowed the company to route profits through Ireland.
It will be interesting to see what happens next…
Source: Reuters and MarketWatch
