French finance minister blasts UK’s £130m Google tax deal
Pressure is mounting on the European commission to launch a full state aid investigation into the UK’s £130m tax settlement with Google after France’s finance minister attacked the deal.
Michel Sapin said HMRC’s settlement, which allows Google to continue booking£5bn of UK sales via Ireland, “seems more the product of a negotiation than the application of the law”.
His intervention on Tuesday will add force to widespread accusations that Britain’s tax settlement amounts to a sweetheart deal for Google.
According to the Financial Times, Sapin told a conference in Paris: “The French tax administration does not negotiate the amount of taxes owed. It applies the rules.”
Google’s parent company, Alphabet, became the world’s most valuable companyafter the US markets opened on Tuesday. Shares rose after it was announced overnight that 2015 revenues grew by 13% to $75bn (£52bn), while the group’s global tax rate fell to just 17%.
Google’s UK company, which the search group insists only provides support services to companies in Ireland and the US, paid £21m in tax in 2013, according to its latest published accounts.
British tax inspectors began investigating Google’s UK tax affairs in 2009, andHMRC insists it has closely scrutinised the legality of the search group’s controversial Irish structure. That examination is said to have involved visits to Google’s offices and scrutiny of activities as far back as 2005.
Three years later, however, French tax officers pursued a more aggressive approach. Raids were carried out on Google’s Paris office while armed police kept the building on lockdown. A 24-hour search ended in officials departing with hard drives full of files.
Google later claimed the tax inspectors had illegally taken documents stored on servers outside France – a claim that was dismissed by the courts.
French officials are examining whether Google’s Irish operations “engage in commercial activity in France … without making the relevant tax declarations”. They are said to be seeking £380m in back taxes.
A spokesman for the European commission declined to respond to Sapin’s remarks. He confirmed the commission had received a letter complaining about Google’s UK settlement from Stewart Hosie, the deputy leader of the Scottish National party. The spokesman stressed that, while all complaints would be fully considered, no formal investigation had been launched.
In the last two years, the commission has started using its state aid powers to challenge tax rulings made by a number of member states on the operations of some of the biggest multinationals in the world. The commission can intervene where it believes a particular multinational has received special treatment.
Last week, the US Treasury official Robert Stack, who is responsible for issues relating to international taxation, flew to Brussels to discuss the commission’s state aid tax investigations – most of which have focused on deals granted to American businesses, including Amazon, Apple, Starbucks and McDonalds.
“We are concerned that the EU commission appears to be disproportionately targeting US companies,” he said.
The Apple chief executive, Tim Cook, visited Brussels last month to lobby the commission. It is facing a state aid investigation into a tax ruling it received from the Irish government.