France seeking €1.6 billion in Google back taxes

France is seeking €1.6 billion in back taxes from Google, criticised for its use of aggressive tax optimisation techniques, a source at the finance ministry has said.

“As far as our country is concerned, back taxes concerning this company amount to €1.6bn,” the official, who spoke on condition of anonymity, said.

A spokeswoman for Google France declined to comment on the amount when contacted, saying only that the company obeyed tax rules in all countries where it operated.

The finance ministry also declined comment.

An unsourced 2012 media report mentioned a claim for €1bn by French authorities, which Google denied at the time.

French tax authority usually issues at least one preliminary assessment before its final assessment, which can be challenged in court if not accepted, tax advisers say.

Earlier this month, Finance Minister Michel Sapin ruled out striking a deal with the US search engine company, as the British government recently did

Mr Sapin said the sums at stake in France were “far greater” than those in Britain.

France, Britain and other countries have long complained atthe way Google and other digital giants generate huge profits in their countries but have their tax base in countries such as Ireland, where corporate tax rates are far lower.

Meanwhile, a panel of British politicians has criticised a back-tax deal between Google and UK tax authorities, calling it “disproportionately small” and branding the company’s explanation of its tax planning “disingenuous”.

The UK Public Accounts Committee, which scrutinises public spending, also criticised the tax authority, saying it appeared “to have settled for less corporation tax from Google than other countries are willing to accept”.

It was “not possible to judge whether a £130m tax settlement agreed between Google and HMRC is fair to taxpayers,” the Committee said in its report.

Google is now a unit of holding group Alphabet.

The internet search giant prompted a political storm last month when it announced the settlement, which was hailed by British finance minister George Osborne as a “great success”.

But the Labour party described it as “derisory” and said it showed the government’s failure to act against corporate tax avoidance, a hot topic for austerity-weary Britons.

Google has said it follows the tax rules in every country in which it operates. But the committee questioned this.

“Google told us that international tax rules are complex and that it just follows them. This is disingenuous. There is nothing in the rules that says you must set up two companies in Ireland and send large royalty payments, via the Netherlands, to a company that is tax resident in Bermuda,” the report said.

Google generated around £24 billion of revenue in Britain between 2005 and 2015 – the period covered by the settlement.

The back tax deal brought its total tax bill for the period to less than £180m.

“The sum paid by Google seems disproportionately small when compared with the size of Google’s business in the UK,” the committee said.

It said reports that tax authorities in France and Italy were seeking much larger sums from Google, raised questions about whether Her Majesty’s Revenue and Customs was being too soft on big companies like Google.