Eurocrats gang up on US firm

It is starting to look like Google’s tax avoidance days might be coming to a close after France and Germany have joined the UK in demanding that the search engine start paying its share.

Politicians in Germany and France have pledged to press for Google to be quizzed on corporate income tax after realising that the company’s line that it sells its products from low-tax Ireland might not be true.

Google had been apparently saving a fortune by telling the tax people in France, Germany and Britain that it had no tax presence in relation to its advertising business.

Google designates its French and German units as providers of marketing and support services to Google Ireland, which pays most of its turnover to an affiliate in Bermuda.

But in April, Google advertised dozens of French and German-based positions in job categories that fall within the area it describes as “selling”. It has changed the adverts, but it looks like the cat is well and truly out of the bag.

Last year, French tax authorities raided Google in an investigation of whether its Paris office does sales work, and the country has asked the company for $2.2 billion in back taxes. In Germany, according to Reuters, an investigation is now beginning.

Google spokesperson Peter Barron has been insisting to anyone who will listen that said the “do no evil” search outfit follows tax rules in every country where it operates. But it is starting to look like the cash strapped EU is wondering why Google is taking the Nintendo, whatever the law says.

Even in the UK, David Cameron is finding it difficult to explain why he is asking poor people to fund his cuts to the NHS when he could be funding an entire restructuring of the country if Google paid up.

Pierre-Alain Muet, vice-president of the National Assembly’s finance commission and a member of the ruling Socialist party, said he planned to quiz Google about the inconsistencies when ita ppears before a parliamentary committee this month looking into how multinationals structure themselves to minimise tax bills.

In Germany, Sven Giegold, Member of the European Parliament (MEP) for the German Green Party said he would call on the tax authority in Hamburg, where Google Germany is based, to investigate the company’s affairs.

All this is stepping up pressure on Google and it is not likely that it will be able to hold out in the longer term. If the Europeans do not see some cash arriving soon, then the chances are they will legislate and Google might find that its loopholes are closed. It would be easier, not to say cheaper, if it came to pay out a more reasonable amount of money on its own volition before the laws are changed.