Google faces $1.3bn French ruling amid rising tax populism

Bloomberg

Google will find out this week if it owes 1.12 billion euros ($1.3 billion) in back taxes to France, just days after it was slapped with a record antitrust fine by the European Union.
Paris judges are set to rule as soon as Wednesday whether Alphabet Inc.’s Google illegally dodged French taxes by routing sales in the country out of Ireland. The case hinges on whether Google’s European headquarters in Ireland should be taxed as if it also has a permanent base in France.
“The backlash has been unrelenting because tax populism and Google-bashing are on the rise among certain politicians,” said Maximilien Jazani, a tax lawyer in Paris. The case could have “extremely harmful” side effects because any change in how tax law is interpreted would apply to all companies and could deter investment in France, he said.
Authorities across the continent have been trying to claim a slice of the billions of dollars of profits Google’s owners kept out of their grasp using techniques known as the Double Irish and the Dutch Sandwich. To end a dispute spanning 14 years, it recently struck a 306 million-euro settlement with Italian tax authorities. Last year, Mountain View, California-based Alphabet also agreed to pay 130 million pounds in an accord with UK authorities for taxes going back to 2005 after facing sharp criticism for booking ad sales through Ireland to reduce liability.
Google representatives declined to comment on the French ruling. The company previously said it complies with French law and was cooperating fully with officials to answer their questions. The company got a boost last month when an adviser at the Paris administrative court delivered a non-binding opinion that Google should be let off the hook in part because of weaknesses in the legislation.
The French ruling follows the European Commission’s June 27 decision to levy a 2.4 billion euro fine for systematically
favoring its own price-comparison-shopping service in its general search results. The
EU case is one of at least three targeting the search engine amid demands for action from lawmakers. In a digital economy, underpinned by the likes of Facebook Inc. and Amazon.com Inc., Jazani said there should be a strict notion of “permanent establishment” that’s not linked to where the services are consumed, in order to avoid territoriality conflicts between states.
“If you broaden the notion there will be double-taxation or even multiple-taxation,” the lawyer said.