Google will pay a total of $1.1 billion to end a four-year probe into its tax activities in France. This is a combination of fine and repayment of additional taxes Google didn’t pay first time around.
France and Germany have both pushed for tighter tax regulations of multination tech giants. Others — Apple included — have been charged in the past. They may have to stump up more cash in the future, too.
“We have now settled tax and related disputes in France that have persisted for many years,” Google said in a statement. It continued that:
“The settlements comprise a 500 million euro payment that was ordered today by a French court, as well as 465 million euro in additional taxes that we had agreed to pay, and that have been substantially reflected in our prior financial results.”
Like Apple, Google uses local tax loopholes by running its taxes through Ireland in something called the “Double Irish” arrangement. This tax loophole is widely exploited by multinational corporations.
Google, Apple and other tech giants vs. France
Apple has previously ran afoul of France. It agreed to pay French authorities around $571 million in back taxes in February 2019. Like Google, this followed a multi-year audit of Apple’s accounts by the French tax administration.
Apple has had similar issues with the wider European Union, of which France is one part. In August 2016, the EU handed Apple a 13 billion euros ($15.5 billion) tax bill. An investigation alleged that Apple paid the equivalent of as little as 0.005 percent on all European profits in 2014. Apple has since paid this charge, but is disputing the allegations.
Today’s Google fine certainly isn’t going to be the end of this particular story. France is actively working to establish new laws covering this area. They would stop tech giants getting away with paying so little tax. One proposed law is the GAFA law, named after the initials of Google, Apple, Facebook and Amazon. GAFA would charge 3% tax on revenues for tech companies earning more than $842 million per year. As its name suggests, that would cover the big four tech companies.
Apple and other tech giants have long insisted that they pay every cent that they owe. “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,” Google said in its statement today.