Reuters reports that French authorities are talking to Google about paying substantial “back taxes.” The wire service says that the French Budget Minister Jerome Cahuzac had “convincing proof” that Google owed France money. France is one of several European countries that believe Google should be paying more in taxes.
Cahuzac said that if the parties failed to come to some agreement France would take the issue to the courts.
All this seems to confirm what was reported earlier this month by satirical French publication Le Canard Enchaine that Google was to be hit with a billion Euro tax bill by the French government. It was not clear at the time whether the report was serious. Apparently it is.
Reuters reports that Google gross sales in France (2010) were 69 million Euros and that the company paid 2 million Euros in taxes (against 4.4 million EUR income). Those taxes would be nearly 50 percent of income but less than 1 percent of gross sales.
Pressured by recessionary economies and the need for more revenue, UK, France and Germany are investigating various US companies, in addition to Google, over tax issues. Among them are Facebook, Twitter and even Starbucks, all of which use various international subsidiaries and accounting measures to minimize their European tax liability.
Google maintains it complies with all domestic and international European laws and regulations. Nonetheless, it’s quite likely that Google will wind up paying something to settle the matter in France.
If it does so, however, you can be sure that other governments will want the same thing.