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Google's Paris Office Raided as Part of Tax Evasion Investigation

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By Jonathan R. Tung, Esq. on May 26, 2016 12:57 PM

According to Reuters, French police arrived at Google Paris offices Tuesday and raided the location as part of an ongoing investigation into whether or not the Internet company is dodging taxes. The probe, opened last June, is part of an anti-corporation sentiment that started when the public became increasingly aware of multi-nationals taking advantage of tax avoidance schemes across the globe.

Google has maintained that it is compliant with French law.

Rules of the Trade, Roots of the Raid

Large multinational companies have taken advantage of international tax loopholes that allow them to pay lower taxes. Due to popular pressure, such loopholes are now being closed down or tightened. One that still lives on in popular memory is the Double Irish.

Google, now part of Alphabet Inc., lowers its tax bill substantially in European countries because it reports its sales in London. However this arrangement's linchpin rests on Dublin employees concluding all the sales contracts.

But in France, where contracts are closed and executed with local clients, Google would have to report such revenue and pay local taxes.

The Game of Tax Avoidance

Tax reduction has been a strategic part of the company operations for a few years now, if not longer. Ever since the company spun Alphabet Inc., tax filings indicate that Google has saved itself about $2.4 billion in international taxes by moving its revenues to Alphabet, Inc., a Bermuda company.

A (Not So) Hefty Fine

The fine that Google could be staring at if found guilty by a French court works out to be about $204,000, according to Reuters.

The raid couldn't have happened at a worse time for Google, now that revelations like the Panama Papers have shined a light on international tax avoidance tactics and at a time when public sentiment against big business has reached a fever pitch.

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