
Google's Paris HQ raided in tax probe - vmarovic
http://www.bbc.com/news/business-36370628
======
ersii
_" Several have been accused of using legal methods to minimise their tax
bills."_

Since when is it illegal to follow the law? Sure, we all have different
opinions on the legal gray areas and of whether certain or all laws are
legitimate and to what extent - but come on, that quote is just ridiculous.

~~~
bambax
Don't know about American law, but in French the notion exists and is called
"abus de droit"; just because you can do something "in general", you can't do
it with the specific purpose of circumventing another legal obligation.

For example, as an Irish company, you can open a subsidiary in France to do
business in France. That's a right.

But if you're doing business in France essentially, you can't make the French
company a subsidiary of an Irish one that doesn't have any other activity, in
the sole purpose of evading French taxes. That would be abusing the right (of
opening subsidiaries). It may conform to the letter of the law but not to its
spirit, and can be punished.

Of course, this is all a very grey area and up to the judge to evaluate (and
my explanation perhaps lacks clarity); but it's real nonetheless!

~~~
mike_hearn
_For example, as an Irish company, you can open a subsidiary in France to do
business in France._

The whole point of the EU single market is that you _do not_ have to do that.
You can set up shop in Ireland and sell to the French market until the cows
come home. You only owe Irish taxes (modulo the recent completely crazy VAT
changes).

Laws that say "forget the law, anything we think is unreasonable is illegal"
are a growing problem in Europe. It makes the EU look like fools to the rest
of the world when something as basic as the rule of law becomes flaky and
unpredictable. France is not just causing itself problems with this kind of
action, their greed will create a bad impression of the whole of the EU.

~~~
allendoerfer
>Laws that say "forget the law, anything we think is unreasonable is illegal"
are a growing problem in Europe. It makes the EU look like fools

Not trying to start a flamewar here, but the common German/European
perspective on the US legal system consists of corporations owning it (because
of huge costs), consumers abusing it ("cat in microwave/washing
machine/toaster", unreasonable compensations, class action lawsuits) and
agencies outright ignoring it.

Edit: Remembered one more: Juries deciding whether murderers are guilty or
not. Simply unthinkable over here. Ironically the horror of this scenario is
fuelled by the US/Hollywood itself.

Edit 2: War on drugs / world's highest prison population / racial profiling /
death sentence. The longer I think about it, the worse it gets. I think I made
my point. The image is really, really bad.

~~~
gravypod
We might have our kinks, but I don't think that most of the people in jail
ended up in there because "Yea, what you were doing was allowed by the law,
but you know we kind of didn't like it".

When that finally starts to happen in the USA, you can count on me being in
the streets protesting.

Edit: You may also want to consider the current practices in Germany regarding
frivolous law suits against websites. We aren't the only country with this
problem. So is every place.

~~~
allendoerfer
>Edit: You may also want to consider the current practices in Germany
regarding frivolous law suits against websites. We aren't the only country
with this problem. So is every place.

Can you elaborate?

~~~
atomwaffel
I assume they are referring to the cease-and-desist letters sent to websites
that don't publish an "Impressum"[1] (information about the person responsible
for the website, including an address and phone number). It's a holdover from
print publications, and there's a bit of legal uncertainty as to whether it
applies to small private websites, but the threshold for it being required is
really low.

Unsurprisingly, this has created an industry of scummy law firms that
specialise in finding infringing websites and sending them cease-and-desist
letters with a bill for their legal fees attached.

[1]
[https://en.wikipedia.org/wiki/Impressum](https://en.wikipedia.org/wiki/Impressum)

------
kafkaesq
The BBC article didn't explain why the raids were conducted (mostly likely
because it wasn't yet known at the time). Meanwhile, _Le Parisien_ (which
appears to have broken the story) has come forward with more details, which
have since been translated by other outlets, e.g.:

 _France’s financial prosecutor’s office said the raids were carried out with
the assistance of the police anti-corruption unit and 25 information
technology experts. French daily Le Parisien, which first reported the news,
said the raid took place at dawn and involved some 100 investigators. Officers
were still at the scene Tuesday afternoon._

 _“These searches are the result of a preliminary investigation opened on June
16, 2015 relative to aggravated tax fraud and organized money laundering
following a complaint from French fiscal authorities,” the prosecutor’s office
said in a statement. “The investigation is aimed at finding out whether Google
Ireland Ltd. is permanently established in France and if, by not declaring
some of its activity on French soil, it has failed to meet its fiscal
obligations, in particular with regard to corporation tax and value added
tax.”_

[http://sanfrancisco.cbslocal.com/2016/05/24/french-police-
ra...](http://sanfrancisco.cbslocal.com/2016/05/24/french-police-raid-googles-
paris-offices-in-1-7-billion-tax-fraud-money-laundering-probe/)

------
ChuckMcM
As others have pointed out this can happen in France given the way in which
laws are prosecuted, my sister lives there part time and really likes this
aspect of the country.

That said, its really interesting to watch such powerful interests dance
around (in a more general sense) shooting each other. The whole scheme which
companies like Apple, Google, others use to "legitimately" minimize their tax
burden and the financial pressure being put on the people of the EU by the
immigration situation and general financial mismanagement, has really created
a fascinating pressure vector.

The pressure point is this; If these companies paid their "fair" taxes in the
countries where they do business, then there would be extra tax money to
support the government obligations and less need for austerity programs.

Interesting times.

~~~
toomuchtodo
Is this pressure enough to force out "legitimate methods of EU tax avoidance"
via legislation?

It's really, really hard for me to sympathize with US tech companies given
their financial situation:

> "Apple, Microsoft and Google Hold 23% Of All US Corporate Cash Outside the
> Finance Sector

> Apple leads the pack with $215.7 billion in cash, followed by Microsoft at
> $102.6 billion, and Google at $73.1 billion.

[http://www.geekwire.com/2016/apple-microsoft-google-hold-
nea...](http://www.geekwire.com/2016/apple-microsoft-google-hold-nearly-
quarter-u-s-corporate-cash/)

~~~
ChuckMcM
I agree, back when the UK was complaining about Google I was hoping that would
push them into unifying tax policy.

The challenge though is getting _everyone_ on board, without a common vision
of how it should work, you won't get progress.

~~~
AnthonyMouse
> I agree, back when the UK was complaining about Google I was hoping that
> would push them into unifying tax policy.

It's not just tax policy. The countries that have less well educated workers
or less wealthy consumers want to give companies some incentive to come there.
If the tax rules were the same they would use lower rates. If the rates were
also the same then would use the tax revenue to fund subsidies or projects
that act as de facto tax breaks.

Your choices are essentially "countries compete with each other for investment
capital" and "world government with completely uniform laws." And the second
one is Very Bad: Monoculture, nowhere to run if it goes wrong, single target
for corruption and capture, etc.

------
criddell
What's the purpose of the raid? To seize file cabinets filled with documents?
Wouldn't a company like Google have most of their documents in the cloud?

~~~
_wmd
In many locales by law businesses are required to maintain certain sets of
documents at their registered address. For example in the UK this includes at
least the company articles of incorporation, although the list is more
extensive than that. It's one reason many small businesses have their
accountant as their registered address.

    
    
        Private limited companies must keep some or all of their statutory records
        at their registered office, unless they are stored at a SAIL address
        instead. These include the certificate of incorporation, the memorandum and
        articles of association and share certificates (if applicable).
    
        Furthermore, the following records and registers, where applicable, must be
        kept up-to-date and stored at the registered office or SAIL address for
        inspection purposes:
    
            Register of members.
            Register of company directors.
            Register of secretaries.
            Directors’ service contracts.
            Directors’ indemnities – security against liability claims or legal costs..
            Copies of resolutions.
            Minutes of meetings.
            Contracts relating to purchase of own shares.
            Documents relating to redemption or purchase of own shares out of capital by private company.
            Register of debenture holders.
            Instruments creating charges and register of charges
    

My presumption would be that the "raid" involved requesting their finance
department furnish the inspectors with at the minimum whatever such documents
are required to be held in France, and that such a "raid" would be standard
practice at the onset of any tax investigation

~~~
evgen
There is really not much to sieze from an office like this, but I can assure
you that the infosec and physical security teams test people on raid process
and probably do such drills on at least a yearly basis. Basically how to hand
over exactly as much as you are required to provide, shield the rest, and
notify people upstream to start the internal side of the response process.

If this was an engineering office then there would be a lot more involved
(making sure such a raid did not expose code or allow on-premise agents to
access raw data that an engineer at that facility might otherwise be able to
access for dev and debugging purposes, etc.) I think this is just a sales
office really, so it is more symbolic than anything else...

~~~
Kell
Sales office or not, the important aspect of this raid is to gather business
data, not technical data. And emails are probably the most important thing
they are after.

------
Isamu
"Several have been accused of using legal methods to minimise their tax
bills."

I don't see this ending well.

------
6stringmerc
Hopefully one outcome of this undertaking will be some clarity - does Google
sufficiently use legal methods? If so, this raid might be more show and a
"fishing expedition" than genuinely deployed based on cause. However, if there
was sufficient evidence to justify such a raid, then I will be interested to
read the findings by the French authorities. Discussing tax reform is about as
contentious as discussing IP/copyright reform, in that unless major global
players get consistent, then it's just too entrenched to disrupt I think.

Personally I'd like to see both avenues get shaken up but it's sort of
questionable in the long-term, as I see both the "big authorities" and "big
players" as having a lot of political overlap and influence. Basically
minimize until it goes away (or causes such rot the host dies).

------
curiousgal
>Several have been accused of using legal methods to minimise their tax bills.

What a terrible accusation. Good to know the whole world needs some serious
tax reform.

~~~
adventured
I find this rather unusual. The exact same comment, quoting the exact same
text, on HN and Reddit. With the Reddit comment in question being among the
highest scoring in the thread:

[https://www.reddit.com/r/news/comments/4ktdm2/google_hq_raid...](https://www.reddit.com/r/news/comments/4ktdm2/google_hq_raided_in_paris_eur_16bn_tax_fraud/d3hon2q)

~~~
curiousgal
Is it unusual to be a user of both Reddit and HN? I didn't think the two were
mutually exclusive.

~~~
tyrust
No, but it is unusual to simply copy-paste comments from one forum to another.
Especially a post that contains (what one would assume is) your opinion.

~~~
curiousgal
Yes that certainly is unusual. I don't know whether you're inferring that's
the case with me or not but here
[http://i.imgur.com/siomNYH.png](http://i.imgur.com/siomNYH.png) I hope that
constitutes enough of a proof.

------
dmfdmf
When asked by a reporter why the tax agents raided Google he replied "Because
that's were the money is".

~~~
allendoerfer
What's wrong with that? You would expect a food inspector to control places
"where meat is".

~~~
zevyoura
It's a joke referencing Sutton's Law:
[https://en.wikipedia.org/wiki/Sutton%27s_law](https://en.wikipedia.org/wiki/Sutton%27s_law)

------
te_chris
Good. The way multinationals are allowed to take the resources of the various
nation states they operate in while contributing nothing themselves, yet still
claiming to be 'people' and demanding all sorts of rights, is beyond the joke.
Before anyone says it, yes I'm aware they pay GST/VAT/PAYE etc, but if I have
to pay company tax, why don't they?

~~~
logicchains
>while contributing nothing themselves

They contribute a service, in this case a search engine that's miles ahead of
its closest competitor, Bing. They don't "take" anything, they offer something
that you're free not to use. Unlike nation states, which are happy to take
whatever they want (claiming they're owed it for providing you things you may
never have asked for, which are paid for by other people potentially against
their will, and for which you're probably not allowed to solicit alternative
providers) and your only option if you don't like it is to emigrate.

Google doesn't throw black people in prison for recreational drug use, Google
doesn't prevent people from marrying who they want, Google doesn't send people
to die fighting pointless wars in the middle east, or drone bomb weddings.

>but if I have to pay company tax, why don't they

If you're uncomfortable with how much taxes you pay, then blame whoever's
taxing you, not Google.

~~~
nametakenobv
Google makes money in France. Given France's economy size, it's probably
billions. They need to pay taxes to the french government for the privilege of
doing business there, so the government can sped it on schools and other
infrastructure, so the french citizens can be prosperous.

~~~
mike_hearn
The idea that doing business is a "privilege" granted by the state is exactly
why France's economy is famously bad, with unemployment double that of the UK.

~~~
chillacy
Is doing business not a privilege elsewhere? In the US you need to register
your business and pay taxes (money from corporations are doubly taxed as
well). The only businesses here who don't do that are drug dealing / crime
enterprises.

~~~
gnaritas
> money from corporations are doubly taxed as well

No they are not. Money is always taxed when it changes ownership, as
corporations are legal persons, it pays taxes on its profit. When shareholders
are given some of that profit via dividends, that money is again changing
ownership so it taxed as income to those shareholders. Saying something is
double taxed is to misunderstand "when" tax applies. If you don't want company
earnings taxed that way, don't be a C corp, but it isn't double taxing.

~~~
chillacy
Double taxation isn't just some vague term I made up:
[http://www.investopedia.com/terms/d/double_taxation.asp](http://www.investopedia.com/terms/d/double_taxation.asp)

What you described is commonly referred to as double taxation. I merely
pointed out that this is more evidence that businesses are legal entities
defined by the government. If businesses weren't legal entities, this wouldn't
be an issue.

However you could have noted that most corporate money is dished out as
salaries and bonuses, which isn't taxed twice because the company can deduct
it as a business expense.

~~~
gnaritas
> What you described is commonly referred to as double taxation

Yes, just as liberals are referred to as leftists by conservatives, it's an
inaccurate and derogatory means of referring to a perfectly normal tax
practice whose sole purpose is intended to make the listener think it's unfair
by glossing over the fact that money is taxed when it changes hands, not when
it's earned. Anyone who calls it double taxation is participating in partisan
propaganda and intentionally spreading ignorance.

~~~
chillacy
Hmm, wasn't aware of that. I learned it in my econ textbook in high school, so
I assumed it was standard terminology. My intention wasn't to offend, and I
personally have no issue with the practice.

------
bunkydoo
Ouch. Part of me thinks the French government would allow this to happen due
to them being non-compliant with that 'right to be forgotten' request.

~~~
Kell
The French gov can only give prosecutors general instruction and those have to
be written down. Oral instructions and individual instructions (prosecute that
case, drop that other one) are forbidden.

A prosecutor can still try to please the government, by doing things he thinks
the gov will like, but if he receive an instruction on that matter... that
would be quite a bit scandalous.

Anyway... the National Prosecutor for Financial Affairs has shown that she is
quite feisty. She goes after a lot of people with a lot of power. With or
without gov. aproval.

------
tyingq
Experiencing a little schadenfreude. Some karma in the idea that an
overarching organization will "crawl" Google's "content" and then potentially
take an action that will affect their bottom line.

Maybe the tax officials should offer Google a chance to "disavow" some of
their book entries :)

------
0xFFC
Idk, but I feel Google is under tremendous pressure right now.Oracle likely
going to win (they have best legal team in whole industry). Europe will hit
Google with antitrust and now this.Microsot is coming for them, and
they(Microsoft) positioned themselves very well.

Maybe I don't realize correctly, but it seems Google is going to have hard
time with all of this.

~~~
BinaryIdiot
> Oracle likely going to win (they have best legal team in whole industry)

You may be right but I really hope you're not. Such a dangerous precedent.

~~~
ocdtrekkie
Arguably, the precedent is already set. 'Fair use' is essentially an excuse to
violate copyright, but with where the decision already is, developers must be
very wary when implementing other company's APIs of what they're getting into
legally. The only question now is whether or not 'fair use' will expand to
cover Google's use case.

