This article will be updated as more details become
Subject Google and digital
taxation in France for non-resident individuals and companies.
Shifting sads or shifting structures?
The Cour d'appel de Paris
a communiqué on 12th September, 2019 stating that Google France
Sarl and Googe (Ireland) Limited had accepted to pay a public
interest fine of 500 million Euros, It did not mention the assessed
tax of €500 million accepted as outstanding for the years
2012-2014, as the announcement concerned only the payment of the
criminal anti-evasion charge.
Whilst Google used the
opportunity to avoid being held criminally liable, as the new
procedure does not involve an admission of criminal liability, the
fact that it got that far shows that the Parquet and the DGFIP mean
business, and that they are prepared to use the procedure to fill
the coffers with value added which otherwise elude, rather than
That should alert anyone
working in France through the internet on a cross-border basis that
their systems need a criminal compliance check.
The Convention will be
published on the French anti-corruption site within 10 days, in
other words by 22 September.
As the issue involved an
analysis of the French concept of "établissement stable" in the
context of internet, the ramifications for those companies,
partnerships and individuals working from France on the
internet will be significant.
The assessment and fine only
concern the tax years 2012 to 2014, and presumably unless Google
adjusted its fiscal structure and behaviour pattern, there may be
further assessments. Note that an Sarl is a société de
personnes and not a limited company as that is understood in the
Its therefore essential that
those using the internet to work in France make sure that their
system is cleared not just for tax but also criminal inspection,
and therefore legal. Whilst the Tax administration can decide that
the tax law has not been infringed, if it does not, then the
Parquet will be involved.
Whilst the French tax
administration and the Parquet Financier experienced
difficulties in functioning together effectively, Mme
Houlette has put a singular amount of effort into easing the
systemic conflicts between the penal system and the tax systems of
investigation of the facts. That has resulted in a significant
addition to the French budget.
The Parquet's attempt for
example to hold the Wildenstein family up as an example failed, as
the law did not admit any of the facts to be classed as criminal at
the time of their being done. The lesson of alleging mens rea
without actus reus has been learnt. That time is now past.
The notion of permanent
establishment in internet issues is therefore now very much on the
table and Channel Island businesses need to take advice when
working with France so as to be able to demonstrate that they do
not have a permanent establishment, for example, through
simple internet transaction of Directors or managers working from
France, or by orders or services processed through the
internet when there is a French entity or establishment within the
same group or beneficial ownership.
Whilst the French
admionstratio failed to prove before the Cour d'appe administratif
earlier in the year, see link below, that Google Frane sarl was not
providing a permanet establishmùent factility to Google Ireled
limited in years up to 2010, the underlyoing facts and the law
appear to have chenged for years 2012-2014.
Commuiniqué du Cour d'appel administrative de
Paris du 25 avril 2019.
13th September, 2019