French Government Seeks To Charge Google 1 Billion Euros in Taxes

http://www.nasdaq.com/article/french-government-seeks-to-charge-google-eur1-billion-in-taxes---report-20121031-00120#.UJEf87Td6-I

by antr • 14 years ago

70 54 14 years ago

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AndrewDucker• 14 years ago

Good luck with that. The European Common Market legislation means that selling services from Ireland to France is incredibly well protected.

benbataille• 14 years ago

Indeed, it is. As long as you operate from Ireland that is.

The French tax authorities apparently have proofs that the whole business is done in France by employees of Google France but billed in Irland. So, technically, if I understand correctly, Google France is accused of paying Google Irland for prestations that don't exist since they haven't been done by Google Irland and that's illegal.

Summing undeclared revenues and penalties and considering the size of Google, I'm not overtly surprised it reaches one billion. I guess Google is going to contest the validity of the tax authorities proofs and it's going to languish in courts for some time until they eventually decide to settle on a lower figure.

Considering that this whole tax dodging is clearly gaming the system, I'm certainly not gonna shed a tear for them anyway. If you do business in a country, it seems only fair to pay its taxes.

CaptainZapp2• 14 years ago

  France for the past four years, weekly newspaper Canard Enchaine reports Wednesday without citing sources.

Er, Canard Enchaine is a satirical paper. Quite good, usually, in annoying politicians.

I would read this news with a barrel full of salt.

http://en.wikipedia.org/wiki/Canard_enchaine

EDIT: Added Wikipedia link

Permit• 14 years ago

I imagine this is the American equivalent to when Iranian news agencies cite the Onion[1].

[1]http://www.msnbc.msn.com/id/49226254/ns/us_news-weird_news/t...

lifeisstillgood• 14 years ago

Le Canard is much more like "Private Eye" in the UK - they actually have a tradition of real journalism, sourced facts, and an independance that allows them to shout BS

Of course they make most money from jokes, but then investigative journalism seems to mostly be bugging answerphones to find out who you are sleeping with.

emillon• 14 years ago

It is satirical but very serious and definitely about real news unlike the Onion. In the past it has revealed quite a few scandals. This page lists them (in french, sorry) :

http://fr.wikipedia.org/wiki/Liste_d%27affaires_r%C3%A9v%C3%...

Example in english :

http://en.wikipedia.org/wiki/Diamonds_Affair

pja• 14 years ago

The UK equivalent would be Private Eye which also carries campaigning investigative journalism alongside the humour and satire.

thomasjoulin• 14 years ago

While satirical, they specialize in investigations, especially related to insider knowledge and whistle blowers. Only the tone is not serious, the content is alway backed with proofs.

Le Monde, an authoritative newspaper as well as others picked up the news too [1]

The Google News issue seems a different matter, the billion in question is due to an (alleged) tax fraud using the technique of the Double Irish with a Dutch Sandwich [2]

[1] (fr) http://www.lemonde.fr/technologies/article/2012/10/30/le-fis...

[2] http://en.wikipedia.org/wiki/Double_Irish_arrangement

CaptainZapp2• 14 years ago

Ok, I stand corrected.

I just thought it's a pretty weird source. Especially the "without citing sources" sounded fishy to me.

patrickaljord• 14 years ago

How is that a tax fraud if it's legal? One of the goal of the EU is the ability to operate a business from one member state to another without any taxation or customs fees. So asking Google to pay these is ridiculous.

chevreuil• 14 years ago

Le canard enchainé is highly respected by french reader for its accuracy and independence. It happens that they use a satirical tone, but their investigation are always strongly documented. That's why they are feared by every politician and public figures in general. By the way they are one of the very few french newspaper that make a profit without any financial help from the state (4,81 M Euros profit in 2011, french source : http://www.challenges.fr/media/20120828.AFP6975/le-canard-en...)

davidhunter• 14 years ago

Chief Executive Eric Shmidt ? I thought he was no longer CEO.

testing12341234• 14 years ago

Eric Shmidt is the "Executive Chairman", but this was sourced from a French newspaper, so it is likely a translation issue between French and English.

guylhem6• 14 years ago

When you owe someone 10'000 Eur you have a problem.

When you owe someone 1 Billion Euro, they have a problem.

With the european regulation protecting interstate commerce, the Double Irish even with a Dutch Sandwich seems legally fine. It will take multiple lawsuits to try to do anything against it.

Note to north american readers- there's a huge political effort in europe, instrumented by the french and german government, to create a new kind of copyright for indexing new articles, ie arrange a special tax scheme to divert money from search engines to the european media companies.

It's just yet another case of entitlement from companies whose business models have mostly been made obsolete.

So this news seems to be just part of the smear campaign, maybe to put more bargaining chips on the table and strongarm google into accepting this. The lows in google stock also frequently made the news these last few weeks - it's more than a coincidence when you consider the emerging difference between french/german newspapers and other news sources on this same fact, and who owns the newspaper.

Good luck to France- she will need it to pull something out of so many shenanigans.

(But deep inside me, I'd love to see the negotiations break, with google removing all french newspaper from google news and see how long the european media companies will last before giving up in their stupid demands while other french-language news source eat their cake - from Quebec or North Africa. That would send the right message to the government - stop messing with the economy)

abolibibelot2• 14 years ago

You're conflating two entirely different issues here (though you're not alone in that, the French government itself is likely to play one issue as a leverage to the other).

The French newspapers that are whining about google indexing their content, are already heavily subsidized by the government and have missed every conceivable opportunity to offer something worthwhile online or on dead paper. There are a handful of very vocal op-eds who keep advocating censoring or curating the internet, coming from the hurtful realization that anybody can express its not so special opinion on the internet - thus levelling the field (in France, like in most places I suspect, celebrity journalists mostly offer vapid copycat opinions).

So, I agree, they're despicable.

Now, there's an entirely different issue: how big companies can get away not paying taxes. This is what this news item is about.

guylhem6• 14 years ago

You're right, they are different issues.

It's just the timing of bring such issues to the attention of the public that seems suspect to me - especially after I noticed how the downs in google stock suddenly became newsworthy.

IMHO, it's not a coincidence.

jobu2• 14 years ago

To be fair, the article itself mentioned both of those issues together, and I think they are related simply because they're both chips on the same poker table.

thwest• 14 years ago

The production of news content -- like aid to the destitute or the military -- might be an obsolete business model but is still an essential social good worth protecting.

guylhem6• 14 years ago

says who?

TruthElixirX2• 14 years ago

Production of news content is happening without the news papers. It is happening without taxing Google 1 billion Euros.

Who says it is outdated? Do you have stats on that? I get more news content now than ever before. There clearly must be money in it, or enough that people haven't stopped producing content.

Also, who says it is a societal good that we must protect? If society no longer values news and refuses to pay for it, who are you to decide we still should?

There will always be demand for news, it just depends on where the demand is.

civilian• 14 years ago

Just because we don't want newspapers subsidized by the government doesn't mean we don't value news content. This is a fallacy that statists have been making for centuries-- you're confusing the values of society with the values of government.

narrator• 14 years ago

As Putin and the Chinese have so deftly showed, you control a country's major media, you control the country. There is a lot of political power bottled up in the news monopolies that Google is disrupting so it would be natural for the people who rely on that power in the government to act to protect it.

guylhem6• 14 years ago

E. Schmidt meeting Hollande, France's president, is therefore quite interesting.

kiba• 14 years ago

Officially, Mr. Hollande and Mr. Schmidt discussed a bill being evaluated in France to make Google pay to for the right to cite news articles from French newspapers. Google opposes the proposal and warned it would exclude French cites from its search engine if France implements such a law.

French cities?

mercurial• 14 years ago

Obviously a type for sites.

mcdoh• 14 years ago

typo?

elemeno• 14 years ago

Cites as in citations.

mtgx• 14 years ago

Did Google avoid paying taxes through some loophole? If so, fine, charge them. But I fear this is just a scare tactic, or rather a punishment tactic from the French Government, because Google doesn't want to pay the French newspaper, and I know the Government wants them to do it, too.

So if they would be honest about this, they would go after everyone that uses the tax loophole, if there is one. But I think they only have Google on sight.

jobu2• 14 years ago

The newspaper-linking tax seems just plain stupid to me. Can't the newspapers just ask Google to remove their content if they don't want it being used for free? Am I missing something about how Google News operates?

France's newspapers are suffering the same as newspapers anywhere, but France is more than willing to prop up a failing industry any way they can instead of forcing them to modernize.

ryanhuff• 14 years ago

Isn't it as simple as these French newspapers adding a robots.txt file to their servers?

macspoofing• 14 years ago

> Can't the newspapers just ask Google to remove their content if they don't want it being used for free?

They want to have their cake and eat it too. They want to remain on the index for visibility and ad revenue, but they also want google to pay for the privilege.

macarthy12• 14 years ago

The "real corporate tax rate" in France is lower than the so-called low Irish rate.

http://www.fixmytax.com/index.php/fix-my-tax-blog-2/27-frenc...

jasiek• 14 years ago

Wait, are they trying to retroactively extract taxes?

chollida1• 14 years ago

I don't really think they have the legal ability to do this given the EU rules in place however, the government can go back and reassess a tax filling.

I live in Canada and I believe they have up to 7 years for which they can go back and audit you.

abhimishra• 14 years ago

This basically seems like a tax on hyperlinking, which is at the core of the web. Absurd.

A Forbes article (http://www.forbes.com/sites/timworstall/2012/10/30/explainin...) explains further that the complaint from French publishers is about the portion of the search results page that shows links to those publishers' content (since that results page has ads on it). They could exclude themselves from indexing easily (and forego traffic of course).

grecy• 14 years ago

Does anyone else think it's a crime that Google, Apple, etc. avoid paying corporate taxes and they should be stopped?

These companies benefit greatly from public services like public transport, electricity, police, fire, roads, etc. but then use loopholes to avoid paying taxes for them.

At the end of the day, this just results in billions of dollars higher private profits and crumbling infrastructure and social services for America.

The only possible long-term outcome is collapse.

dscrd• 14 years ago

>Does anyone else think it's a crime that Google, Apple, etc. avoid paying corporate taxes and they should be stopped?

Well, technically, if something has been declared a crime then doing that is a crime...

Is dodging taxes wrong? Of course it is! It gives an unfair advantage to those who can dodge taxes, and that has nothing to do with serving the customer better, delivering a better product or being innovative.

Nevertheless, trying to collect taxes from four years back is also one sort of unethical.

accountoftheday• 14 years ago

I hope Dow Jones realizes that Le Canard enchaîné is publishing satire.

ramblerman• 14 years ago

This article calls Eric Schmidt the 'Chief Executive'

I thought he stepped down last year and Page took over that role?

French Government Seeks To Charge Google 1 Billion Euros in Taxes

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