French compliance crackdown claims another victim as Google pay €1 billion fine

French compliance crackdown

27th September 2019

France – a country known for some of the best food, wine and art in the world – is also unsurprisingly a contractor hotspot. Business is booming in the Gallic nation – with so many new companies starting up in the country that some employers are warning that skilled workers are becoming increasingly hard to source.

Another area that the country excels in is cracking down on tax and compliance. France has been one of the leading powers pushing for tougher global compliance systems – and hasn’t hesitated to challenge large companies in the process.

The latest example of this occurred earlier this month, with Google ordered to pay a staggering €1 billion to the government over allegations of tax fraud. Here’s what contractors need to know about the French compliance crackdown.

French compliance crackdown – Google under fire

The French compliance crackdown, which has claimed a number of multinational scalps, has once again brought Google under scrutiny, with the company agreeing to pay a landmark €945 billion settlement over historic allegations. The fee will be broken down into €500 million for charges of tax evasion, and €465 million to settle claims with French tax authorities. Investigators concluded that Google failed in its tax obligations by not declaring activity on French territory.

Due to tax loopholes surrounding digital earnings, Google was able to declare most of its company earnings in Ireland, where corporation tax is 12.5%. While this is a common practice for many multinationals, France has been keen to change this. In fact, Google’s tax settlement comes just two months after the French government passed a bill to tax all global technology companies operating within the country.

This new 3% tax on revenues, rather than profits generated in France, targets companies with at least €750 million in annual revenues and applies only to revenue from digital business. The tax could yield the French government up to €500 million a year, according to estimates.

Latest of many steps

This is the latest of many steps making up the wider French compliance crackdown. Back in 2012, France fined Amazon €198 million for alleged back taxes, interest and penalties on undeclared taxes, with the pressure applied by the nation leading to Amazon agreeing an out of court settlement in order to avoid serious sanctions. On a more global scale, the US and France recently teamed up  to urge countries to reach a deal on global digital taxation, and make sure that tech companies are paying reasonable levels of corporation tax.

Contractors need to pay attention

Clearly, tax evasion around the world, is becoming heavily scrutinised – with the French compliance crackdown illustrating the rule, not the exception. With initiatives such as the Common Reporting Standard, and the ease with which countries can now share information, it is more crucial than ever to make sure that you don’t fall foul of the law.

With the complexity of international compliance legislation, the speed with which jurisdictions can exchange information, and the willingness of authorities to prosecute, the chance of being punished for simple carelessness has increased sharply.

For this reason, we advise that contractors seek the help of an expert contractor management service that can take the weight of international compliance off your shoulders, and allow you to purely focus on the job at hand. Contact us today.


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