A French court handed Google’s parent company, Alphabet, a reprieve from a 1.11bn-euro ($1.27bn) tax bill on Wednesday in a major victory for the tech giant.
The decision comes after six years of fighting with the French tax authority over back taxes it claims are due from the tech firm for the years 2005 to 2010.
The French tax administration argued that Google had to pay taxes in France because the California firm and its subsidiary in Ireland have been selling a service for inserting online ads to clients in France for years through its Google search engine.
But the Paris administrative court noted that the subsidiary, Google Ireland Limited, doesn’t have a “permanent establishment” in France via the company Google France, also a subsidiary of the US group Google Inc.
I’ve already done the “I told you so” piece. And do note that country by country reporting doesn’t change this in the slightest. Under the standard international tax treaties sales from outside the country pay tax where the sales are booked, not where the customers are. It is only when there is a permanent establishment in the country that everything comes under that taxing jurisdiction.
There is no dodging here, this is not an abuse of the rules, it’s following them as they are written. As HMRC has been known to point out, this is just how the system works.
Shame, I’m hoping all these blatant European shakedowns of American companies push them into the loving embrace of a free UK.
Had a brief twitter exchange with Meg Hillier on this. See how quickly she abandons ship
David S. Lesperance @dslesperance 4:29 PM – 3 Jul 2017
“Are @Meg_HillierMP & @margarethodge upset enough a #AppleTax to actually try and change law or convenient piñata?”
MegHillierMPVerified account @Meg_HillierMP Jul 3
Replying to @dslesperance @margarethodge
“We already did. See Flint amendment by @CarolineFlintMP which allows for public country by country reporting. Backed by then @CommonsPAC”
MegHillierMPVerified account @Meg_HillierMP Jul 3
Replying to @dslesperance @margarethodge
“Still more to do @CarolineFlintMP @CommonsPAC @margarethodge”
David S. Lesperance @dslesperance Jul 3
“C by C doesn’t change liability just reporting so a sideshow at best here is root of problem in real world https://www.quora.com/Considering-this-report-of-21-trillion+-dollars-having-been-hidden-away-in-tax-havens-what-can-be-done-to-bring-this-money-back-into-the-economy-realistically/answer/David-S-Lesperance …David S. Lesperance”
Then crickets!
A french court upholding the law! There’s a new one.
Tim:
What did you mean by “Of course, I have been wrong in such matters, as with Apple, the EU Commission and Ireland”.
Anxious Irish people need to know…
I thought the EU Commission claim against Apple was going to be for a couple of hundred million.
Thanks Tim
@David S. Lesperance
+1
Politicians and the likes of Murphy expect the argument to begin and end with what is “morally right”.
Particularly because they think they get to choose what is morally right for the rest of us.
Best piece I have read on this in awhile is https://taxatlincolnox.wordpress.com/2017/07/07/legal-philosophy-and-a-voluntary-obligation-to-pay-taxes/
First of all, Dongguan John can rest assured that this is no vindication of the EU and its bully-boy culture. The international principles and systems have been in llce and somehow thrived decades before the EU project got off the ground and will remain in place after the EU has crumbled to dust. Also, this was a French domestic court shooting down a domestic tax authority.. and that tax authority has no recourse to Europe. It is nice to see these domestic laws still exist in dark corners.
Second, after all the fanfare with which this government body announced its action against the corporate citizen, basicall presenting it as a done deal, the law has intervened and stopped it doing whatever it wants. Ritchie will be sick and demand the law changes to stop this ‘abuse’, but I for one am grateful for the rule of law.
David S. Lesperance: God, is that how The Yuuf write nowadays? All that punctuation diarrhoea makes it impossible to read.
TImmy –
Country by country solves all problems. It even cures cancer.
Some years ago, before I was permanently banned from TRUK as “boring”, I pointed out to Murphy that we used to have country-by-country reporting (except for those countries which were “insignificant” in terms of sales *and* in terms of profit *and* in terms of capital employed) under UK GAAP so he hadn’t invented the idea; on a separate occasion I pointed out that every company has to prepare tax returns to the tax authorities of every country where it does business so country-by-country reporting exists and is carried out – but is only reported to shareholders when it is significant to shareholders.
Murphy only makes sense if you assume that the tax authorities in lots of countries are deeply corrupt and in cahoots with corrupt businessmen whose high-minded shareholders would immediately demand that their company pay moar taxes to these countries if they were told that they were, by proxy, paying less tax than the maximum that they could.