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France Will Not Negotiate Back Taxes With Google

February 2, 2016 - Written By Dominik Bosnjak

The Minister of Finance in France, Michel Sapin, dismissed the possibility of making any kind of deal with Google regarding potential back taxes they owe to France during a finance sector conference held in Paris earlier today. The journalists on-site were told that the “French tax authorities do not negotiate the amount of taxes owed” with anybody, Google included. However, Sapin admitted that “there is a discussion underway about which rules apply” to the US tech giant, which he described as a “perfectly legitimate” thing to do. The French minister was asked about a potential tax deal with Google in the context of a somewhat similar and rather recent controversial agreement made between the American company and the UK government in late January. However, he explained that the potential amount of money owed to France is “far greater” than the one the British tax office settled for ten days ago. For reference, Google came to an agreement to pay £130 million ($187.11 million) to the UK in back taxes dating back to 2005.

The question of whether or not to ambush foreign companies that are avoiding taxes in their home countries by “hiding in Europe” is now fresher than ever on the Old continent, especially regarding giant tech corporations and related technology tax affairs. This is because unlike in the US, most fiscal years in Europe have either ended or are just about to end and pretty much every country is looking to fill their budgets with new revenue streams. Naturally, they’re looking to do as little cutting as possible in the process. Last Thursday, the eternal political dilemma saw an interesting twist as the EU competition commissioner Margrethe Vestager threatened to investigate the aforementioned controversial tax settlement between the British tax office and Google. Given her history with taking on and – more importantly – beating giants such as Gazprom, Starbucks, and even Google itself, in the past in similar situations, her words are definitely not to be taken lightly by anyone involved. At the same time, Brussels seems keener than ever to overrule national governments and not only cancel but also take back what they deem are improper tax breaks given to huge multinational companies by introducing a universal taxation standard.

Yesterday, Vestager even publicly appealed to companies breaking the European law in this manner and mentioned a possibility of lower fines for those that admit to wrongdoing on their own. Granted, an unsolicited admission of guilt by anybody in the industry isn’t likely to happen, but this just illustrates that the EU is losing trust in the power of national governments regarding taxation of huge companies which are creating jobs and boosting their own economies.