French police and prosecutors swooped on Google’s Paris offices, intensifying a tax-fraud probe amid accusations the Internet giant fails to pay its fair share across the European Union.
The raids are part of preliminary criminal probe opened in June 2015 after French tax authorities lodged a complaint, according to a statement from France’s financial prosecutor. The investigation is seeking to verify whether Google’s Irish unit has permanent establishment in France and whether the firm failed to declare part of its revenues in France, according to the statement.
The raids come as Google, which is part of parent company Alphabet Inc., faces outrage in Europe over the small amount of tax it pays in the region. France has called on the company to pay back taxes of about 1.6 billion euros ($1.8 billion).
Google said in a statement that it complies with French law and is “cooperating fully with the authorities to answer their questions.”
Two unmarked cars with police signs on the windshield were still parked outside Google’s Paris office at 8 rue de Londres on Tuesday afternoon. The raids started at about 5 a.m. local time, Le Parisien newspaper reported earlier, citing an unidentified source.
French tax officials first raided Google’s Paris offices in 2011. The country’s government has criticized Google for booking most of its sales to French customers through its Irish subsidiary. Irish corporation tax is just 12.5 percent compared to France’s 33.3 percent rate. Last year, Google’s French subsidiary reportedly paid just 5 million euros in French tax, despite sales to French customers that analysts have estimated were greater than 1 billion euros.
Google’s European subsidiaries also pay hefty royalty payments to another Irish subsidiary that is physically located in Bermuda and which holds Google’s international intellectual property licensing rights. This reduces the profitability of Google’s European subsidiaries, which means they pay less tax.
Earlier this year Google reached a controversial 130 million pound ($190 million) settlement with the U.K. government over an audit covering 10 years of accounts. Critics called the amount “derisory.”
The scrutiny of Google’s tax affairs comes amid a European Union clampdown into how some nations may be offering special deals to big companies.
