France will take all needed measures to guarantee that all multinationals operating in the country will pay their taxes, expecting more cases to follow after Google and McDonald’s were targeted by tax raids, Finance Minister Michel Sapin said.
Sapin stated during an interview with European newspapers that there is no chance for further negotiations for any deal with Google on back taxes, as Britain did in January.
After investigators searched McDonald’s French headquarters on May 18 on a tax probe, dozens of French police raided Google’s Paris headquarters on Tuesday, growing an investigation on uncertainties of tax evasion.
“We’ll go all the way. There could be other cases,” Sapin said.
The work on tax started about four years ago by authorities when they transferred tax data to judicial authorities that look into any possible criminal angle, and today it is being developed by these raids on the hands of police and justice investigators, according to Sapin.
Public Anger
There is rising anger on firms such as Google, McDonald’s and other multinationals at the way businesses exploit their presence around the world to minimize the tax they pay, and thus similar firms, including Starbucks, are under rising pressure from both the public and government.
Google assured that it’s totally complying with French law, however McDonald’s refused to comment on the search, referring back to past comments that it is proud to be one of the biggest tax payers in France.
Sapin said he could not discuss what sums were at stake because of the confidentiality of tax matters, however a source in his ministry had said in February that French tax authorities were seeking some 1.6 billion euros ($1.78 billion) in back taxes from Google.
No Deal
“We don’t do deals like Britain; we apply the law” said Sapin when asked if tax authorities could strike a deal with the tech giant.
Google agreed in January to pay 130 million pounds ($190 million) in back taxes to Britain, prompting criticism from opposition lawmakers and campaigners that the sum was too low.
“There won’t be negotiations,” Sapin said, adding that there was always the possibility of some marginal adjustments “but that’s not the logic we’re in.”
Google pays a very shy amount of tax in most European countries because it reports almost all sales in Ireland; an action that is possible thanks to a gap in international tax law that hinges on staff in Dublin concluding all sales contracts.
On the other hand, the raids this week are part of a separate judicial investigation into aggravated tax fraud and the organized laundering of the proceeds of tax fraud, and should Google be found guilty of that, it shall faces either up to 10 million euros ($11 million) in fines or a fine of half of the value of the laundered amount involved.
A preliminary inquiry into McDonald’s was opened early this year after former investigating magistrate and politician Eva Joly filed a lawsuit in December on behalf of an employee committee, a judicial source said.
Authorities had sent McDonald’s France a 300 million euro bill for unpaid taxes on profits believed to have been funneled through Luxembourg and Switzerland, according to report by French business magazine L’Expansion, last month.
The report said tax officials had accused the giant U.S. burger chain of using a Luxembourg-based entity, McD Europe Franchising, to shift profits to lower-tax jurisdictions by billing the French division excessively for use of the company brand and other services.
The judicial source confirmed the investigation was looking into this.
The government said this week that it had raked in 3.3 billion euros in back taxes and penalties from just five multinationals in 2015.
“Nothing prevents big groups from coming to us and declaring their taxes,” Sapin said.