French Government Seeks To Charge Google 1 Billion Euros in Taxes(nasdaq.com)
nasdaq.com
French Government Seeks To Charge Google 1 Billion Euros in Taxes
http://www.nasdaq.com/article/french-government-seeks-to-charge-google-eur1-billion-in-taxes---report-20121031-00120#.UJEf87Td6-I
14 comments
Good luck with that. The European Common Market legislation means that selling services from Ireland to France is incredibly well protected.
Indeed, it is. As long as you operate from Ireland that is.
The French tax authorities apparently have proofs that the whole business is done in France by employees of Google France but billed in Irland. So, technically, if I understand correctly, Google France is accused of paying Google Irland for prestations that don't exist since they haven't been done by Google Irland and that's illegal.
Summing undeclared revenues and penalties and considering the size of Google, I'm not overtly surprised it reaches one billion. I guess Google is going to contest the validity of the tax authorities proofs and it's going to languish in courts for some time until they eventually decide to settle on a lower figure.
Considering that this whole tax dodging is clearly gaming the system, I'm certainly not gonna shed a tear for them anyway. If you do business in a country, it seems only fair to pay its taxes.
The French tax authorities apparently have proofs that the whole business is done in France by employees of Google France but billed in Irland. So, technically, if I understand correctly, Google France is accused of paying Google Irland for prestations that don't exist since they haven't been done by Google Irland and that's illegal.
Summing undeclared revenues and penalties and considering the size of Google, I'm not overtly surprised it reaches one billion. I guess Google is going to contest the validity of the tax authorities proofs and it's going to languish in courts for some time until they eventually decide to settle on a lower figure.
Considering that this whole tax dodging is clearly gaming the system, I'm certainly not gonna shed a tear for them anyway. If you do business in a country, it seems only fair to pay its taxes.
France for the past four years, weekly newspaper Canard Enchaine reports Wednesday without citing sources.
I would read this news with a barrel full of salt.
http://en.wikipedia.org/wiki/Canard_enchaine
EDIT: Added Wikipedia link
While satirical, they specialize in investigations, especially related to insider knowledge and whistle blowers. Only the tone is not serious, the content is alway backed with proofs.
Le Monde, an authoritative newspaper as well as others picked up the news too [1]
The Google News issue seems a different matter, the billion in question is due to an (alleged) tax fraud using the technique of the Double Irish with a Dutch Sandwich [2]
[1] (fr) http://www.lemonde.fr/technologies/article/2012/10/30/le-fis...
[2] http://en.wikipedia.org/wiki/Double_Irish_arrangement
Le Monde, an authoritative newspaper as well as others picked up the news too [1]
The Google News issue seems a different matter, the billion in question is due to an (alleged) tax fraud using the technique of the Double Irish with a Dutch Sandwich [2]
[1] (fr) http://www.lemonde.fr/technologies/article/2012/10/30/le-fis...
[2] http://en.wikipedia.org/wiki/Double_Irish_arrangement
How is that a tax fraud if it's legal? One of the goal of the EU is the ability to operate a business from one member state to another without any taxation or customs fees. So asking Google to pay these is ridiculous.
The goal is allow businesses to operate between member states as easily as within them, which includes preventing double taxation. The Double Irish thing is exploiting a loophole created by the combination of such EU regulations and peculiarities of the Durch and Irish tax codes, to effectively avoid taxation entirely, which may not be against the letter of the law, but certainly against its spirit.
It's quite possible for such things to be retroactively declared invalid, such as in the case of Hoolywood's "stupid German money": http://usatoday30.usatoday.com/money/media/2003-08-11-hollyw...
It's quite possible for such things to be retroactively declared invalid, such as in the case of Hoolywood's "stupid German money": http://usatoday30.usatoday.com/money/media/2003-08-11-hollyw...
This is true, but Google is hardly the only company using these loopholes in the EU. It makes little sense to make them an example, unless you were also trying to pressure them on another front (newspapers).
Why not go for the best biggest payday and make a lesson for everyone else to fall in line?
well, at least Apple and Microsoft would make for bigger paydays, and I'm sure there are more. Apple obviously has far higher revenue and profits, and they earn the majority of both abroad.
It is possible they'll go for all the big players, though, who knows.
It is possible they'll go for all the big players, though, who knows.
Ok, I stand corrected.
I just thought it's a pretty weird source. Especially the "without citing sources" sounded fishy to me.
I just thought it's a pretty weird source. Especially the "without citing sources" sounded fishy to me.
They are well known for protecting their sources, and for doing a thorough job in having multiple independent confirmations.
The "Canard Enchainé" is one of the oldest french newspaper still in print, and probably the only one not using ads or receiving public help.
The "Canard Enchainé" is one of the oldest french newspaper still in print, and probably the only one not using ads or receiving public help.
It is satirical but very serious and definitely about real news unlike the Onion. In the past it has revealed quite a few scandals. This page lists them (in french, sorry) :
http://fr.wikipedia.org/wiki/Liste_d%27affaires_r%C3%A9v%C3%...
Example in english :
http://en.wikipedia.org/wiki/Diamonds_Affair
http://fr.wikipedia.org/wiki/Liste_d%27affaires_r%C3%A9v%C3%...
Example in english :
http://en.wikipedia.org/wiki/Diamonds_Affair
The UK equivalent would be Private Eye which also carries campaigning investigative journalism alongside the humour and satire.
Le canard enchainé is highly respected by french reader for its accuracy and independence. It happens that they use a satirical tone, but their investigation are always strongly documented. That's why they are feared by every politician and public figures in general.
By the way they are one of the very few french newspaper that make a profit without any financial help from the state (4,81 M Euros profit in 2011, french source : http://www.challenges.fr/media/20120828.AFP6975/le-canard-en...)
I imagine this is the American equivalent to when Iranian news agencies cite the Onion[1].
[1]http://www.msnbc.msn.com/id/49226254/ns/us_news-weird_news/t...
[1]http://www.msnbc.msn.com/id/49226254/ns/us_news-weird_news/t...
Le Canard is much more like "Private Eye" in the UK - they actually have a tradition of real journalism, sourced facts, and an independance that allows them to shout BS
Of course they make most money from jokes, but then investigative journalism seems to mostly be bugging answerphones to find out who you are sleeping with.
Of course they make most money from jokes, but then investigative journalism seems to mostly be bugging answerphones to find out who you are sleeping with.
Chief Executive Eric Shmidt ? I thought he was no longer CEO.
Eric Shmidt is the "Executive Chairman", but this was sourced from a French newspaper, so it is likely a translation issue between French and English.
When you owe someone 10'000 Eur you have a problem.
When you owe someone 1 Billion Euro, they have a problem.
With the european regulation protecting interstate commerce, the Double Irish even with a Dutch Sandwich seems legally fine. It will take multiple lawsuits to try to do anything against it.
Note to north american readers- there's a huge political effort in europe, instrumented by the french and german government, to create a new kind of copyright for indexing new articles, ie arrange a special tax scheme to divert money from search engines to the european media companies.
It's just yet another case of entitlement from companies whose business models have mostly been made obsolete.
So this news seems to be just part of the smear campaign, maybe to put more bargaining chips on the table and strongarm google into accepting this. The lows in google stock also frequently made the news these last few weeks - it's more than a coincidence when you consider the emerging difference between french/german newspapers and other news sources on this same fact, and who owns the newspaper.
Good luck to France- she will need it to pull something out of so many shenanigans.
(But deep inside me, I'd love to see the negotiations break, with google removing all french newspaper from google news and see how long the european media companies will last before giving up in their stupid demands while other french-language news source eat their cake - from Quebec or North Africa. That would send the right message to the government - stop messing with the economy)
When you owe someone 1 Billion Euro, they have a problem.
With the european regulation protecting interstate commerce, the Double Irish even with a Dutch Sandwich seems legally fine. It will take multiple lawsuits to try to do anything against it.
Note to north american readers- there's a huge political effort in europe, instrumented by the french and german government, to create a new kind of copyright for indexing new articles, ie arrange a special tax scheme to divert money from search engines to the european media companies.
It's just yet another case of entitlement from companies whose business models have mostly been made obsolete.
So this news seems to be just part of the smear campaign, maybe to put more bargaining chips on the table and strongarm google into accepting this. The lows in google stock also frequently made the news these last few weeks - it's more than a coincidence when you consider the emerging difference between french/german newspapers and other news sources on this same fact, and who owns the newspaper.
Good luck to France- she will need it to pull something out of so many shenanigans.
(But deep inside me, I'd love to see the negotiations break, with google removing all french newspaper from google news and see how long the european media companies will last before giving up in their stupid demands while other french-language news source eat their cake - from Quebec or North Africa. That would send the right message to the government - stop messing with the economy)
You're conflating two entirely different issues here (though you're not alone in that, the French government itself is likely to play one issue as a leverage to the other).
The French newspapers that are whining about google indexing their content, are already heavily subsidized by the government and have missed every conceivable opportunity to offer something worthwhile online or on dead paper. There are a handful of very vocal op-eds who keep advocating censoring or curating the internet, coming from the hurtful realization that anybody can express its not so special opinion on the internet - thus levelling the field (in France, like in most places I suspect, celebrity journalists mostly offer vapid copycat opinions).
So, I agree, they're despicable.
Now, there's an entirely different issue: how big companies can get away not paying taxes. This is what this news item is about.
The French newspapers that are whining about google indexing their content, are already heavily subsidized by the government and have missed every conceivable opportunity to offer something worthwhile online or on dead paper. There are a handful of very vocal op-eds who keep advocating censoring or curating the internet, coming from the hurtful realization that anybody can express its not so special opinion on the internet - thus levelling the field (in France, like in most places I suspect, celebrity journalists mostly offer vapid copycat opinions).
So, I agree, they're despicable.
Now, there's an entirely different issue: how big companies can get away not paying taxes. This is what this news item is about.
You're right, they are different issues.
It's just the timing of bring such issues to the attention of the public that seems suspect to me - especially after I noticed how the downs in google stock suddenly became newsworthy.
IMHO, it's not a coincidence.
It's just the timing of bring such issues to the attention of the public that seems suspect to me - especially after I noticed how the downs in google stock suddenly became newsworthy.
IMHO, it's not a coincidence.
That's conspiracy theory logic. The tax issue has been bothering multiple governments, and many non-European media companies have problems with the news aggregation. Google is a very large entity, just because it is challenged on two different fronts does not mean that there's a coordinated assault.
You know the saying - once is bad luck, twice is a coincidence, thrice is usually an enemy action.
I see the google news strongarm with france and germany, the tax issues with other european countries, the reports about the stock lows in the french press, anger against youtube allowing the diffusion of anti-religion movies - with protests in the uk and continental politicians explaining it is hurting sensibilities - it just seems more than pure randomness to me.
I make a judgement call. Call that conspiracy theory if you prefer.
Maybe google is just a very large entity, but it's a) profitable, b) non european and c) advocating free speech, which makes it a good target for populist european politicians.
I see the google news strongarm with france and germany, the tax issues with other european countries, the reports about the stock lows in the french press, anger against youtube allowing the diffusion of anti-religion movies - with protests in the uk and continental politicians explaining it is hurting sensibilities - it just seems more than pure randomness to me.
I make a judgement call. Call that conspiracy theory if you prefer.
Maybe google is just a very large entity, but it's a) profitable, b) non european and c) advocating free speech, which makes it a good target for populist european politicians.
A hole in your theory is that France is among the least tolerant European countries as far as Islam is concerned. Head-to-toe Islamic garments for women are forbidden by law, for example. So I don;t think they'd be bent out of shape about an inflammatory video on YouTube to the extent of wanting to punish Google; any more than they were bent out of shape about French satirical magazine Charlie Hebdo publishing cartoons of Mohammad at the same time. As for the stock lows, that was worldwide news in the financial press because it surprised everyone.
I wouldn't call that a hole, considering that between 85% to 93% of muslims voted for Hollande (depending on which polls you prefer to take), the current president of France.
It makes even more sense if you remember that these laws were mostly supported by the previous government.
Charlie Hebdo is certainly a leftist satirical magazine, but you should know that polls showed around 47% of the population considered it should not have published of Mohammad cartoons - even AFTER it was firebombed, death threat were issued and several arrested.
In the end, this is IMHO a good move by Hollande in realpolitik : show to those who care about you that you care about them too. Even better if you can claim it's about "increasing tolerance".
It makes even more sense if you remember that these laws were mostly supported by the previous government.
Charlie Hebdo is certainly a leftist satirical magazine, but you should know that polls showed around 47% of the population considered it should not have published of Mohammad cartoons - even AFTER it was firebombed, death threat were issued and several arrested.
In the end, this is IMHO a good move by Hollande in realpolitik : show to those who care about you that you care about them too. Even better if you can claim it's about "increasing tolerance".
I gave you +1 for middle brow dismissal.
You're right it's not, and that's what makes it infuriating since both Google and the French government storytelling benefit from lumping these issues together ("look at ze seellee control-freaks French" vs. "we raise high the light of Justice and Equality for Humanity as a whole").
Of course it's not a coincidence. Eric Schmidt met the president of France. They don't meet every other day, so it's normal for them to talk about various issues at once.
To be fair, the article itself mentioned both of those issues together, and I think they are related simply because they're both chips on the same poker table.
As Putin and the Chinese have so deftly showed, you control a country's major media, you control the country. There is a lot of political power bottled up in the news monopolies that Google is disrupting so it would be natural for the people who rely on that power in the government to act to protect it.
E. Schmidt meeting Hollande, France's president, is therefore quite interesting.
The production of news content -- like aid to the destitute or the military -- might be an obsolete business model but is still an essential social good worth protecting.
Just because we don't want newspapers subsidized by the government doesn't mean we don't value news content. This is a fallacy that statists have been making for centuries-- you're confusing the values of society with the values of government.
The issue is that without the state to subsidizing it and if the content is freely available through other intermediary companies, then there is no apparent way to cover the costs of media production.
When you write what appears to be "I think all currently viable options for funding serious news production are inappropriate", then it doesn't sound like you value news content. That is honestly an attempt to not strawman you, just a (perhaps confused) understanding of your seemingly untenable position. If an alternative to state funding is viable while still allowing free aggregation and distribution by arbitrary third parties, I am definitely interested in it.
When you write what appears to be "I think all currently viable options for funding serious news production are inappropriate", then it doesn't sound like you value news content. That is honestly an attempt to not strawman you, just a (perhaps confused) understanding of your seemingly untenable position. If an alternative to state funding is viable while still allowing free aggregation and distribution by arbitrary third parties, I am definitely interested in it.
Then don't make it freely available. If your content is so valuable, paywall it.
You wrote 10 words, but I'm going to reply with a wall of text anyway. I believe the value being discussed above is the value to society of having a well educated populace, which is notably different than the perceived economic value to any individual; the main justification for taxes existing in any form is that there are many cases where people spending their money without intelligent self interest is for the best interest of everyone, including themselves (it's trivial to show how this can be true, see the prisoners dillema).
Having an educated populace has enough value that we have public schools; I don't see how informing adults is any different.
Note that I think there are also a ton of unrelated recent societal changes that make it not economically feasible for the news to be behind a paywall; notably that recent shifts that have dramatically reduced cost of publishing and aggregating have made it extremely easy to republish other journalists work trivially. All you need to do is have a subscription to the NYT paywall and one guy getting paid shit to reword their articles; to any other user they will choose the free content that has the same core information that the other site could never have afforded paying for investigative journalism. Patents on reporting facts are obviously untenable, so I see no real option other than the state supporting the media.
Having an educated populace has enough value that we have public schools; I don't see how informing adults is any different.
Note that I think there are also a ton of unrelated recent societal changes that make it not economically feasible for the news to be behind a paywall; notably that recent shifts that have dramatically reduced cost of publishing and aggregating have made it extremely easy to republish other journalists work trivially. All you need to do is have a subscription to the NYT paywall and one guy getting paid shit to reword their articles; to any other user they will choose the free content that has the same core information that the other site could never have afforded paying for investigative journalism. Patents on reporting facts are obviously untenable, so I see no real option other than the state supporting the media.
says who?
Production of news content is happening without the news papers. It is happening without taxing Google 1 billion Euros.
Who says it is outdated? Do you have stats on that? I get more news content now than ever before. There clearly must be money in it, or enough that people haven't stopped producing content.
Also, who says it is a societal good that we must protect? If society no longer values news and refuses to pay for it, who are you to decide we still should?
There will always be demand for news, it just depends on where the demand is.
Who says it is outdated? Do you have stats on that? I get more news content now than ever before. There clearly must be money in it, or enough that people haven't stopped producing content.
Also, who says it is a societal good that we must protect? If society no longer values news and refuses to pay for it, who are you to decide we still should?
There will always be demand for news, it just depends on where the demand is.
Officially, Mr. Hollande and Mr. Schmidt discussed a bill being evaluated in France to make Google pay to for the right to cite news articles from French newspapers. Google opposes the proposal and warned it would exclude French cites from its search engine if France implements such a law.
French cities?
French cities?
Did Google avoid paying taxes through some loophole? If so, fine, charge them. But I fear this is just a scare tactic, or rather a punishment tactic from the French Government, because Google doesn't want to pay the French newspaper, and I know the Government wants them to do it, too.
So if they would be honest about this, they would go after everyone that uses the tax loophole, if there is one. But I think they only have Google on sight.
So if they would be honest about this, they would go after everyone that uses the tax loophole, if there is one. But I think they only have Google on sight.
[deleted]
The newspaper-linking tax seems just plain stupid to me. Can't the newspapers just ask Google to remove their content if they don't want it being used for free? Am I missing something about how Google News operates?
France's newspapers are suffering the same as newspapers anywhere, but France is more than willing to prop up a failing industry any way they can instead of forcing them to modernize.
France's newspapers are suffering the same as newspapers anywhere, but France is more than willing to prop up a failing industry any way they can instead of forcing them to modernize.
> Can't the newspapers just ask Google to remove their content if they don't want it being used for free?
They want to have their cake and eat it too. They want to remain on the index for visibility and ad revenue, but they also want google to pay for the privilege.
They want to have their cake and eat it too. They want to remain on the index for visibility and ad revenue, but they also want google to pay for the privilege.
Isn't it as simple as these French newspapers adding a robots.txt file to their servers?
[deleted]
The "real corporate tax rate" in France is lower than the so-called low Irish rate.
http://www.fixmytax.com/index.php/fix-my-tax-blog-2/27-frenc...
http://www.fixmytax.com/index.php/fix-my-tax-blog-2/27-frenc...
Wait, are they trying to retroactively extract taxes?
I don't really think they have the legal ability to do this given the EU rules in place however, the government can go back and reassess a tax filling.
I live in Canada and I believe they have up to 7 years for which they can go back and audit you.
I live in Canada and I believe they have up to 7 years for which they can go back and audit you.
This basically seems like a tax on hyperlinking, which is at the core of the web. Absurd.
A Forbes article (http://www.forbes.com/sites/timworstall/2012/10/30/explainin...) explains further that the complaint from French publishers is about the portion of the search results page that shows links to those publishers' content (since that results page has ads on it). They could exclude themselves from indexing easily (and forego traffic of course).
A Forbes article (http://www.forbes.com/sites/timworstall/2012/10/30/explainin...) explains further that the complaint from French publishers is about the portion of the search results page that shows links to those publishers' content (since that results page has ads on it). They could exclude themselves from indexing easily (and forego traffic of course).
Does anyone else think it's a crime that Google, Apple, etc. avoid paying corporate taxes and they should be stopped?
These companies benefit greatly from public services like public transport, electricity, police, fire, roads, etc. but then use loopholes to avoid paying taxes for them.
At the end of the day, this just results in billions of dollars higher private profits and crumbling infrastructure and social services for America.
The only possible long-term outcome is collapse.
These companies benefit greatly from public services like public transport, electricity, police, fire, roads, etc. but then use loopholes to avoid paying taxes for them.
At the end of the day, this just results in billions of dollars higher private profits and crumbling infrastructure and social services for America.
The only possible long-term outcome is collapse.
>Does anyone else think it's a crime that Google, Apple, etc. avoid paying corporate taxes and they should be stopped?
Well, technically, if something has been declared a crime then doing that is a crime...
Is dodging taxes wrong? Of course it is! It gives an unfair advantage to those who can dodge taxes, and that has nothing to do with serving the customer better, delivering a better product or being innovative.
Nevertheless, trying to collect taxes from four years back is also one sort of unethical.
Well, technically, if something has been declared a crime then doing that is a crime...
Is dodging taxes wrong? Of course it is! It gives an unfair advantage to those who can dodge taxes, and that has nothing to do with serving the customer better, delivering a better product or being innovative.
Nevertheless, trying to collect taxes from four years back is also one sort of unethical.
I hope Dow Jones realizes that Le Canard enchaîné is publishing satire.
I thought he stepped down last year and Page took over that role?