Google may face €1bn tax bill

TAX authorities in France are looking to claim as much as €1bn from internet giant Google, according to Le Point magazine.

The levy would amount to a record for a redressement fiscale, said Le Point claiming government and parliamentary sources. This refers to the tax office charging unpaid taxes plus, usually, additional penalty payments which may vary depending on whether the taxpayer is thought to have deliberately underdeclared or not.

In June French tax inspectors examined Google offices in Paris as they opened an investigation into the multi-national’s tax policies. They were, in particular, examining how Google moved revenue and tax liability between countries - a strategy known as transfer pricing.

Multinational companies can use transfer pricing to lower profits in a division in a country that levies high taxes. In recent years, Google has cut the amount of tax it pays in France by funnelling revenue through Holland and Bermuda, before reporting it in low-tax Ireland.

In 2012, Google's Paris offices declared that its revenue was €192.9m, it made a net profit of €8.3m and paid €6.5m in tax.

A year earlier, the company paid just €5.5m in tax. Analysts, however, believe that Google’s revenue amounted to nearly €1.4bn in France in 2011, mostly from internet advertising.

Google maintains it complies with all tax laws in countries where it operates.

A Google spokesman in France declined to comment on the report, saying the company does not comment on rumours.

The Finance Ministry also declined to comment, citing tax confidentiality.

Earlier this month, French authorities fined Google €150,000 for ignoring a three-month deadline to align its practice of tracking and storing user information with national laws.