Bloomberg News

France Tax Probe Into Google Enters Final Stages, Minister Says

January 15, 2013

France’s inquiry into Google Inc. (GOOG:US)’s tax affairs is coming to an end and the results may be announced within the next six months, Technology Minister Fleur Pellerin said today.

“It appears that Google, Facebook or others, who are located in France, are not submitted to the same conditions, as far as tax and VAT are concerned, as the French players,” Pellerin said in an interview with Bloomberg TV at the Paris- based Finance Ministry. “That doesn’t set the right conditions for a fair competition.”

The investigation into Google started two years ago, according to Pellerin. Meanwhile, France is also weighing options to align the taxes on multinational Internet giants such as Google, Amazon.com Inc. (AMZN:US) and Facebook Inc. (FB:US) with those imposed on local companies.

In what may be Europe’s first such effort, President Francois Hollande’s government has said it will look into changing laws this year to prevent online companies from paying levies on French earnings in European countries with lower tax rates. The government is also considering options for common European value-added taxes on sales.

French officials have said Google, Amazon, Apple Inc. (AAPL:US) and Facebook are able to sell to French consumers while not paying the 19.6 percent French VAT. Instead, they pay lower rates in Luxembourg or Ireland, where they have their European Union headquarters.

A French Senate report cited a study showing that Google pays an effective tax rate of 2 percent to 3 percent.

“Google complies with tax law in every country in which it operates and we are confident we comply with French law,” Anne- Gabrielle Dauba-Pantanacce, a representative for Google in Paris, said in an e-mailed statement on behalf of the company. “We cooperate with local authorities and work with them in order to answer all their questions on Google France and our services.”

To contact the reporters on this story: Caroline Connan in London at cconnan@bloomberg.net; Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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