In France, Google won. The American giant prevailed in the court battle against the Paris tax authorities, which contested Mountain View's non-payment of 1,115 billion euros in taxes in the period 2005-2010.
The central issue is the same around which various other disputes open throughout Europe against American multinationals revolve: the use of the so-called "Double Irish", the mechanism which in the past allowed (and still allows, albeit in a different form) not to pay taxes in countries where turnover is produced, but only in Ireland, where tax rates are considerably lower.
Essentially, the Irish branch of Google - the group's European operations head - does not pay taxes in France. The Administrative Court of Paris, however, agreed with Mountain View, thus canceling the taxman's claim. The cancellation of the tax recovery procedure was not welcomed by the French government, which has already announced an appeal.
But European rules say that a company must pay taxes in countries where it has a permanent establishment. And Google, according to the judges, does not have it in France: its approximately 700 employees are not independent from the Irish office and cannot accept, without the approval of that same office, online advertisements from French customers.
This closes an important chapter of a long-standing issue, given that several European countries have accused Google of channeling the revenues of its activities from all over Europe to Ireland alone to evade taxes in the states where the turnover is actually produced.
Google has always defended itself by saying that it has complied with European laws, which in fact allow it to maintain a headquarters in a country where the level of taxation is more advantageous. This system has also been exploited by many other American giants such as Apple, Starbucks and McDonald's.
In May, Google and the Italian Revenue Agency had closed a dispute similar to the French one by agreeing to pay 306 million euros.
