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back to article French gov 'plans to hand Google €1bn tax bill' - report

The French tax office will be handing Google a €1bn tax bill to make up for revenues from France routed through Google Ireland, claims French weekly Le Canard Enchaîné*. An inquiry into Google's Transfer Pricing - how profits and revenues are moved across borders by the corporation - has just finished and according to Le Canard …

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Meh

Of course they will pay it!

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Anonymous Coward

Perfectly legitimate but I suppose Napoleon, I mean Holland must find a way to pay for the public service spending he refuses to cut. 75% tax anyone?

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Anonymous Coward

Knowing what a childish bunch of morons Google are they will probably pay France €999,999,999.99.

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Profit != Turnover

"Google France paid only €5m in corporation tax to the French government in 2011 on a turnover of approx €1.4bn."

Corporation tax is paid on profit. Turnover is NOT profit. Repeat turnover is not profit. Profit is what a company has left over after it's paid off everything else, including fees to parent companies, employees salaries and taxes, etc.

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Re: Profit != Turnover

Which is why they pay so little tax - they do clever accounting tricks like licensing branding etc... and claim they made 4p profit on that €1.4bn.

Corporation tax should be paid, at a lower rate, on turnover, instead of profit. That way, all those ridiculous accounting techniques disappear.

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Terminator

Re: Profit != Turnover

Yes,

But these are MPs, and they sometimes struggle with real-life accounting principles, unlike the businesses that help pay for their nice offices. chaffeurs and stately homes.

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Bronze badge

Re: Profit != Turnover

NO....just NO

OK, so you have some companies using LEGAL loopholes to redirect income to minimise taxation (this is a duty of limited companies by the way)

Under your scheme, EVERY company would see their tax bill rise, possibly wiping out their thin margin, for the sake of hitting companies who have lots of money.

You want to stop it happening then close the loopholes, just don't be surprised when the big boys move 99% of their current operation offshore leaving one Office manager to schmooze the politicians into adding more loopholes.

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Re: Profit != Turnover

"Corporation tax should be paid, at a lower rate, on turnover, instead of profit"

What? So my company (which sells aeroplanes) has a turnover of 100Bn however, making aeroplanes is expensive so it costs me 99.5Bn to make them along with all my wages, etc. Profit is rather healthy at 500m though.

so you are saying I pay say 1% of 100Bn rather than 20% of 500m? Sure that will work, ive just gone into the red by a tune of 500m using your figures.

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Anonymous Coward

Re: Profit != Turnover

Since Google seems to be so tragically unprofitable in the United Kingdom and France, perhaps we should do the kindest thing for them and nationalise their European divisions, fire all the executives (if they're unable to turn a profit on 1.4 billion turnover they're obviously incompetent) and run it as a public company until it can return to profitability. At which point, if Google asks nicely, we'll sell it back to them. How about it, Google?

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Silver badge

Re: Profit != Turnover

Since just about every company in the world is in bermuda, they hide $100Bn of 'costs' their, Bermuda has no armed forces - I think i can see a way of paying for those new aircraft carriers

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Anonymous Coward

Re: Profit != Turnover

Google? Thin Margin? Oh come on.

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FAIL

Re: Profit != Turnover

> Corporation tax should be paid, at a lower rate, on turnover, instead of profit.

errr.. that's called VAT. It's 20% if you hadn't noticed.

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Anonymous Coward

Re: Profit != Turnover

"Google? Thin Margin? Oh come on."

You really haven't grasped the incredibly simple "You can't introduce a tax law that only applies to Google" concept, have you?

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Re: Profit != Turnover

A business with a 0.5% profit margin is not going to stay in business very long.

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Anonymous Coward

Re: Profit != Turnover

Err, is France introducing a new law?

As I read the article, the French govt. is merely talking about sending Google a bill on all the money they are smuggling out via Ireland and Bermuda.

That sounds pretty much like an existing law being enforced.

Or haven't you grasped the incredibly simple concept of making tax dodgers pay their due?

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Anonymous Coward

Re: Profit != Turnover

"Corporation tax should be paid, at a lower rate, on turnover, instead of profit"

Hang on, is this really such a bad idea?

The idea of a "Corporation Tax" is surely meant to be a tax on corporations and reflect the fact that they are part of a civilised society and should contribute proportionately to that society, same as any individual. Surely turnover generated in any given country is as good a measure of this proportion as anything. Why punish profit?

Imagine if personal Income Tax was based on what you have left over at the end of the month (after mortgage/car payments, bills, holidays etc) rather than what you get in the bank at the start? While we'd all love this, it would be crazy to implement. The law treats corporations as individuals in other regards, so why should this be any different?

As for the companies that spend 900m to generate a turnover of 905m, really what is the point of doing this? Just give up. Don’t give me the jobs argument. Business is about making as much money as you can within the law, not charity or public service - profit is the sole raison d'être of any corporation. So a tax on turnover rather than a tax on profit would discourage ineffective and inefficient businesses and encourage/reward profit making by not penalising it.

Accountants would hate it of course. It would kill off a great swathe of their revenue generating practices and but how much better for everyone else without these fiddling systems and complexities. Why, even normal people might be able to understand what was going on.

Regarding the VAT comment, VAT is paid by the consumers of goods and services (which can include a corporation of course) so this is not the same thing as a Corporation Tax. Individuals pay Income Tax and VAT too.

So, imagine the rate is 5%, how would this affect your business?

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Thumb Down

Re: Profit != Turnover

Actually if the numbers are right, your return on investment is abysmal. Do you have real investors?

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Mushroom

Re: Profit != Turnover

@AC 14:16 "As for the companies that spend 900m to generate a turnover of 905m, really what is the point of doing this? Just give up."

I'd happily run a business that worked like that, about 100m of that 900m could simply be my pay packet.

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Anonymous Coward

Re: Profit != Turnover

So when a company is losing money and trying to get a foothold in a market, they should still be forced to pay tax !!?? What possible moral or ethical grounds for demanding such money with menaces exists, except the old ones, "because we have the power and the monopoly on violence to do so".

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Anonymous Coward

Re: Profit != Turnover

Bloody criminal minds seem to be out in force today promoting the theft of other's money probably because they can't make an honest living themselves.

Google's setup is legal, note that the French are not able to attack the structure, instead France is (as is their modus operandi) trying to thieve more money because they think they can. Governments simply want to tax this money because of their insatiable demands for vote buying splurges; and Google won't end up paying, their customers (i.e. you) will.

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Anonymous Coward

Re: Profit != Turnover

Better idea, don't tax companies at all, just tax people. After all, companies get almost no benefits from taxation so why should they pay ? They get no welfare, no health, , no education. Their owners get that, but not the company. The only rationale is the same one, it's easy money from a source that doesn't vote. Immorality defined.

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FAIL

Re: Profit != Turnover

How are you going to pay the tax bill on the turnover, if you only have the profit left over?

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Thumb Down

Re: Profit != Turnover

International companies on tax fiddles should be taxed on profits no matter which country they declare them in. Plan B is to bar their web sites, products and services making it impossible to trade in the UK.

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Mushroom

oh dear

It looks like the Irish Double and Dutch sandwich just turned into the Parisian Steamer.

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"Corporation tax should be paid, at a lower rate, on turnover, instead of profit. That way, all those ridiculous accounting techniques disappear."

And what rate of tax do you think is fair? 5%? 10%?

My profit margin on nigh on 1m turnover is around 8%. Yes, thats right - every million I turn over I 'earn' £80k.

Taxing turnover is not progressive and will ruin the economy.

I am however in favour or rounding up all accountants and doing a 'Clarkson' - even the good ones deserve it...

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Ahem...

If you're employing anyone you're already paying a 12% tax on your labour cost (including yourself, unless you're doing a Google and taking most of your drawings as dividend). That's regardless of whether you make a profit or not. If you occupy any premises, you're paying business rates which are likely to be roughly similar to the rent you're paying. That's also regardless of whether you make a profit or not.

There are a lot of large and very profitable companies that are paying very little in the way of corporation tax at all. If a turnover tax were introduced it would reduce the amount of tax you're already paying, not increase it, because it would cover a much wider tax base.

Would you really prefer your fixed overheads to rise continually in order to permit large multinational corporations to opt out of the tax system?

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Lol

It's about the bigger picture -> France, despite its troubles, is not a nation of idiots. They are well aware that the financial maelstrom affecting the rest of Europe could quickly change course. As such, they are marshalling their defences ahead of time, to prepare for the worst.

According to their government's current structure, that defence means acquiring a lot of money. Services, which their people depend upon, can be rather expensive; someone must pay for these outstanding accounts, and like any nation, they would prefer it not to be them.

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Anonymous Coward

If Google complies

Apple, Samsung, Hyundai and a thousand others will be given bills as well.

Governments are short of funds and will do what is needed to fill the coffers. The US government already taxes foreign non-resident citizens.

This will only get worse.

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Anonymous Coward

Re: If Google complies

Sigh. If you're going to try this kind of FUD, please be less obvious than conflating Apple, one of the world's richest corporations, with a foreign non-resident citizen.

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Anonymous Coward

The French can't generate the tax themselves so the next best thing is to try and fleece any successful business they can. Maybe they should come up with something themselves LeGoogle perhaps. Napoleon went out to take over Europe and it looks like Holland wants to take on the world.

Something about small dogs bark the loudest....

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Anonymous Coward

Err...

It's hardly fleecing Google to ask them to pay fair corporation tax and not engage in technically legal but actually immoral tax avoidance.

It's not like Google are using business equivalents of schemes such as ISAs to avoid paying tax, schemes setup and run by government and encouraged for use. They're spending millions of pounds at top accountancy firms to find technical legal loopholes to allow them to avoid paying vast amounts of money to the host countries who they are happy to make money from the population of.

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Anonymous Coward

Re: Err...

Well said.

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Anonymous Coward

Re: Err...

I like it. There are too many tax loopholes for corporations to slip through without paying their share. Every country should doing the same thing to every corporation.

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Vic
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Re: Err...

> to find technical legal loopholes

This is the point: the loopholes are *legal*.

If the pols really want to do something, they need to close the loopholes. But then that would harm the various organisations in which they themselves have interests...

Vic.

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Anonymous Coward

Re: Err...

I posted the comment you responded just above and I couldn't agree with you more. Pols and self-interest always go ahead of what would be best for the people/country.

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Anonymous Coward

Re: Err...

@Vic - They are loopholes, rather than intended methods for avoidance of tax (Tax free savings, rebates on certain business practices etc). No-one is saying it's illegal, many are saying it's immoral.

I'm quite happy to criticise people or companies for behaving in a legal, yet immoral manner.

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Anonymous Coward

Re: Err...

Who are all the asshats down voting immoral corporate behaviour? Perhaps the Tea-Party has members that like The Reg? No, can't be that. The Reg aint 'mercan.

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Anonymous Coward

Re: Err...

Another bullshit thief wanting a "fair corporate tax". More money to extort outside the law.

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Anonymous Coward

Re: Err...

@AC: Which set of morals are you using to judge immoral corporate behaviour? Is it economics? Not if you support taxing the turnover of a company. Is it the moral stick of the working man? If so is it the morals when you had easy money from misbehaving banking and gov interference or the morals now that all bankers are somehow demonised?

Your moral compass is worthless in the world. So while you might think your clever talking about tea parties being immoral, you might want to figure out what your morality is, where it comes from and how stupid you must be thinking its more moral than someone elses morals. Its the same dumb argument that leads to religious disagreements, or do you think your morals come from a higher power lol

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Bloody good show

The french are pretty good at looking after No. 1

I hope Cameron/Osbourne are taking notes.

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Devil

Re: Bloody good show

I'm sure they will cope; they seem to put looking after number 1 ahead of looking after number 10 at least.

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Anonymous Coward

Lead the way then...

A question to all those harping on about how Google/Starbucks/FB/etc *should* pay more tax then they legally have too...

How about you lead the way and personally pay more tax then *you* legally have too?

Oh, it's all gone a bit quiet now...

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Anonymous Coward

Re: Lead the way then...

I thought the point here is that their business practices are not exactly legal.

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Anonymous Coward

Re: Lead the way then...

There is a difference between paying tax you should and engaging in activities - such as the old run your own company and pay yourself minimum wage scam - which while legal are obviously tax avoidance and immoral.

I live in my society, I am proud to be able to fund it a bit more than most. I may have an ISA, but the government encourage me to do so. I don't have a personal tax accountant who dreams up ways for me to contribute sod all to the society in which I live, while profiting from those who pay their due.

I will not be quiet about this.

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Re: Lead the way then...

The question is not whether they should pay more tax than they legally have to, but whether their tax evasion schemes should be allowed to remain legal. As most of us are on PAYE/not rich enough, we do not have the opportunity to reduce our tax burden by registering in Luxembourg (amazed they and Malta are in the EU). It is about time our governement clamped down on tax evasion and tax havens. Here is a short list we could start with:

Channel Islands

Isle of Man

Gibraltar

And for the French government:

Andorra

Monaco

Personally I like to hear of who is using these schemes and then I do my best not to do business with them, as is my right. For example I buy my coffee at Costa, not Starbucks (although I admit the fact that their "coffee" is brown piss helps my resolve).

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Anonymous Coward

Re: Lead the way then...

That's right google trolls, go ahead and downvote me.

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@Hnk0

Their tax evasion schemes are illegal, their tax avoidance ones aren't. You should probably learn the difference before you spout off much more.

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Anonymous Coward

Re: Lead the way then...

err how about donations to charity, a private pension or private health care?

You know those additional "private taxes" where you pay extra, for the basics which you've already paid taxes for and therefore should be provided by the state.

Maybe Google/Starbucks etc should pay a "private tax" as well

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Re: @Hnk0

I meant tax avoidance, as you rightly pointed out. Thanks for the correction, no thanks for the "spouting", I ain't no teapot.

Rest of my post stands.

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Re: Lead the way then...

Aren't Andorra and Monaco independent states?

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