I dunno if it’s the French or the reporting here

But they’ve made a mess of this on Google’s French taxes.

French tax inspectors searched Google’s Paris offices in June 2011 as it opened a probe into how the company implements transfer pricing between its different units – a strategy many multinationals use to shift revenue and tax liability between countries.

It’s not about transfer pricing at all. Google simply sells all its French advertising through a non-French company. And under EU law it’s perfectly entitled to do so.

And that’s it, finis.

His comments follow reports that France is seeking €1bn in tax from Google over its fiscal strategies.

The French simply do not have a valid claim.

France is also involved in a battle over $252m of disputed back taxes with online retailer Amazon, which channels all its European earnings through Luxembourg to take advantage of the Duchy’s low corporate tax rates.

No, Amazon is in Luxembourg over the VAT rate, not corporation tax rates.

15 thoughts on “I dunno if it’s the French or the reporting here”

  1. Of course there’s no claim. But good headlines for a president who needs to be seen to crack down on those not paying french taxes.
    Hey look, I sell to French customers and pay no corporation tax in France. Its payable where I am based, in the UK, when applicable but not in france where not based.

  2. As we’ve all known for a long time, it’s about the narrative.

    My brother works for the Tories, is pretty right wing, and even he complains about tax avoidance by Google etc.

    Mind you, he’s also a fucking idiot.

  3. I agree that the attack on Google and Amazon is lunacy, that the governments should bugger and that they are likely to lose these cases anyway (it’s just a politically motivared show-off to demonstrate that someone is doing something).

    But there are transfer prices involved because Google has staff in France employed by a French company. This company does not sell anything to any end-users but needs to have revenues to pay the salaries of its staff. These revenues come from transfer prices for services Google France sells to Google Ireland (market research, assistance in negotiations, consulting, whatever). I would assume that the argument is over how high these transfer prices should be.

  4. “I agree that the attack on Google and Amazon is lunacy, that the governments should bugger and that they are likely to lose these cases anyway”

    Do not all governments automatically fvck their citizenry up the arse all the time?

  5. Heh. Amazing that countries are very keen on competitive advantage when it’s in their favour, and not so keen when it isn’t. The EU has a competitive market in tax. If France doesn’t like losing business to Luxembourg, it knows what to do.

  6. I don’t understand the Luxembourg VAT thing – sure for “downloads” but I believe Luxembourg are getting squished over their special VAT rate for those. Everything physical, they have to charge VAT where the customer is, not where they are located.

    I think the entire cross-border VAT thing is a grotesque irony, it is one of the bigger hurdles to the common market, which just shows that 50 years of bureaucratic meddling can’t seemingly even achieve what the bureaucrats set out to achieve.

  7. We seem to be assuming that the french taxman is under the control of the finance ministry, laws, and stuff.
    He’s not.

  8. The President of Frog-Land has an approval rating of 19% and a journalistic class every bit as corrupt as the journalistic class in the USA.

    Throw in a bit of ignorance of tax law and you get End Of Discussion.

  9. My brother works for the Tories, is pretty right wing, and even he complains about tax avoidance by Google etc.

    Mind you, he’s also a fucking idiot.

    The also is redundant. He works for the Tories.

  10. @Interested
    Similarly, I got an E-mail from someone who professes to be an ‘entrepreneur’, free trader & avid UKIP supporter bitchin’ about Google’s french taxes. Have written back suggesting his spiritual home should be with Labour or the LibDems.
    I’m now awaiting the inevitable huffy reply

  11. Since when has the law, specifications, standard practices, industry standards, contracts, prior agreements, or precedents prevented the French acting in a manner convenient to themselves?

  12. No idea about the details of the case, but Emil is clearly correct. this isn’t about the French company making sales and deducting expenses (because it isn’t), but about how much the of the sales income should be shared with the French company that undertakes activities that contribute directly or indirectly to those revenues. Seems perfectly reasonable in principle, although we have no way of knowing whether $250 million is reasonable.

  13. Just a thought, but wouldn’t Google’s best response to this to be abandoning France as an advertising market altogether? It still gets the advertising revenue, because the french advertisers are replaced by non-french advertisers advertising to the french consumers. Do french balance of trade a power of good.
    S’pose the frogs could retaliate by erecting Le Grand Mur d’Internet but i could see several million Gmails being cut off in mid sentence being less than enthusiastically received by the ecrireing public

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