Google spared $1.3-bn tax bill after French court rejects government demand

A French court struck down Google's €1-billion back taxes after it found the search giant did not have sufficient physical operations in France to warrant paying the additional taxes sought.

The Tribunal Administratif de Paris handed down five judgments in the case yesterday after the search firm had challenged the corporate income tax, withholding tax, VAT, minimum business tax, and business value-added tax reassessments it received for its operations in the country.

The court found that Google did not have a permanent establishment in France; it was based in Ireland and simply carried out some functions in France.

As regards VAT, the court said that the company's absence of servers and staffing in France made it incapable of performing many services as it lacked both human resources and technical equipment in that country.

"After a thorough review by the Public Rapporteur, the French Administrative Court of Paris has confirmed Google abides by French tax law and international standards," a Google spokesperson told ZDNet.

"We remain committed to France and the growth of its digital economy."

The French government issued a statement saying its Directorate-General for Public Finance would analyse the judgments alongside the fair taxation of companies operating in the digital economy.

According to the court, Google did not illegally dodge French taxes by routing sales in the country out of Ireland, the Paris administrative court decided yesterday. According to the ruling, Google's European headquarters in Ireland could not be taxed as though it also had a permanent base in France, as requested by the nation's administration.

''Google Ireland Ltd. isn't taxable in France over the period 2005-2010,'' the court said in a statement.

The victory for Google comes as France's newly elected president Emmanuel Macron pledged in June to make the country ''a startup nation''.