Google’s Paris offices were the target of a dramatic dawn raid by French authorities this morning (May 24). As many as 100 tax officials gathered at 5am to enter the chic building on Rue de Londres, near the Place de l’Opera. According to Bloomberg, police cars were still parked outside the building in the afternoon.
Google has confirmed the raid, which was first reported by the Le Parisien newspaper (link in French).
The tech giant is at the center of a tax investigation in France, where authorities say it owes as much as €1.6 billion ($1.8 billion) in back taxes. Google denies wrongdoing. In a statement today it said: “We comply with French law and are cooperating fully with the authorities to answer their questions.”
France’s financial prosector says the raid is part of a preliminary criminal probe that was opened last June to investigate whether Google’s French office was under-declaring its revenues there, and whether its Irish sister company was “permanently established” in France, and therefore subject to taxation, according to Bloomberg. The Paris office was raided before, in June 2011, also in connection with a tax investigation.
Google boasts that its Paris office offers “distinctly Parisian touches” like wine and cheese on Fridays, while still being soaked in Silicon Valley “Googleyness,” embodied by the property’s more whimsical touches, such as the giant sculpture of a cow in the building’s courtyard. The web page for its Paris office tells potential recruits: ”Because we’re also faster and flatter than most other workplaces, all our Googlers have the chance to make an impact on our business.”
Google will indeed have to work fast in Europe now. Apart from the raid and a potentially massive tax bill, it’s facing two anti-trust cases from the European Commission related to its local search results and its Android mobile operating system.
It’s been reported that the commission could seek as much as €3 billion in fines in the search case, and that the bill will be handed over in the coming weeks. A fine of that magnitude would be three times as large as the biggest fine ever levied by the EU—a €1.1 billion penalty against Intel in 2009.
The Android anti-trust case is an even bigger worry for Google, because it strikes directly at its mobile monetization model, a key growth area for the firm. Those charges were just laid on the tech giant last month; the fines there could also be into the billions.
Google has managed to appease some European tax authorities. In January it struck a deal to pay the British taxman £130 million ($185 million) in back taxes covering the last decade. Despite the outcry from British politicians, who called it a “derisory” amount, the deal has stuck and Google has covered its tax affairs in the UK. But as we noted at the time, the British deal was hardly cause for cheer on the part of Google; it was just a lightweight bout before the much tougher regimes that await it on the continent.