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Google's Paris HQ raided in tax probe

228 points by vmarovic 10y ago

tyingq 10y ago
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 :)
Isamu 10y ago
"Several have been accused of using legal methods to minimise their tax bills." I don't see this ending well.
ersii 10y ago
"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.
- hrnnnnnn 10y ago
  It's not the most eloquent phrasing. I think what they're trying to say is "People find legalistic tax-dodging unethical, and they're sick of rich people and big companies getting away with it."
  - derekp7 10y ago
    In other words, they found a bug in the way the law is written, and they are exploiting that flaw to their benefit.
    - batmansmk 10y ago
      Yes, and it is forbidden, as in France what matters is the spirit of the law and not the way it is expressed. It helps keeping common sense upfront; keeping readable and compact text laws.
      - ptaipale 10y ago
        That sounds somewhat scary. The law is not what is written, but what someone says is the "spirit" of it? The end result is going to depend on who gets to interpret the spirit, and this idea is frightening.
        derekp7 10y ago
        Isn't that almost how laws in the US actually work in practice? It isn't about what is written, but how it is interpreted by a judge, and possibly re-interpreted upon appeal(s)? So you have the written law, but also case law on top of it (so to figure out if you are breaking the law, you need to see how your situation compares to the possibly hundreds of somewhat similar but possibly subtly different cases that have already been decided).
  - lloyd-christmas 10y ago
    Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring about corporate tax loopholes.
    - ciaranm 10y ago
      Most people in Europe don't need Lawyers to submit their taxes. In fact, until I started my own company (UK) - I didn't 'submit' taxes. It was calculated (and taken) automatically based on my salary and otherwise declared income.
      - charlesdm 10y ago
        This depends a lot on the country. For example: I'd say most self employed people in Belgium use an accountant to file their taxes. Some (a subset) of those also have a tax lawyer who helps them optimise certain things. Self employed people (i.e. entrepreneurs) who make decent money will have a tax lawyer, because inevitably, you'll bump into an unfriendly tax collector somewhere down the road.
        emp_zealoth 10y ago
        From my experiences with self-employed people (doctors, hundreds of them - im in an MD-motorcycle club) they will try to write off anything and everything and the accountants are there to talk them out of it
        charlesdm 10y ago
        That's only because those tax deductions are often accepted. If one can write off an entire holiday home with a reasonable chance of success, say 80%, then you'd be crazy not to try. If countries don't want that, they should change their laws. In some higher tax countries, a lot of things are technically allowed, because that way they can tax "the little man" a lot and not tax higher earners as much (i.e. doctors, notaries, high earning entrepreneurs, etc).
        10y ago
  - charlesdm 10y ago
    So let's raid the place. Excellent idea. Which judge is going to issue a judgement against Google if they're not breaking any tax laws? I would expect any issues to pop up quite fast during a routine audit of their accounts. This almost feels like blackmail. Pay up, or we'll keep harassing you, raiding your offices etc.
  - deleted 10y ago
    [deleted]
  - JoshTriplett 10y ago
    If you don't like the tax law as written, change it. Until then, following the law as written is perfectly reasonable.
- onli 10y ago
  In Louis Begleys Matters of Honour, there is a similar passage. A big international company in France uses loopholes to not pay taxes, until France strikes back with devastating outcome for the company (don't worry, knowing that spoils nothing important). I think the point is that countries make the law, and companies thinking they can use use the law to act against the interest of countries won't end well. There is precedent.
- realusername 10y ago
  All the laws are judged on intent, not on the exact wording, why would finance laws be any different than the other ones ?
  - mike_hearn 10y ago
    No, people are judged on intent. Laws are meant to be applied as written. That's why you hear about people getting off on a technicality, and why you hear about obviously dumb rulings like two teenagers who get into a relationship and end up guilty of paedophilia. That obviously wasn't the intent of the lawmakers, but it's the result of the law as written. The notion of intent is a very important protection in law ... for the accused. For lawmakers, not so much.
    - gsnedders 10y ago
      > Laws are meant to be applied as written. That's why you hear about people getting off on a technicality, and why you hear about obviously dumb rulings like two teenagers who get into a relationship and end up guilty of paedophilia. This isn't true in the English legal system, which seems worthwhile to note given its wide reaching influence. When dealing with statue law (because obviously common law cannot be applied as written!), judges have three options as to how to interpret the law: the literal rule, where the law is interpreted literally as written; the mischief rule, where something that would have been judged illegal under common law can be judged to have been intended to be illegal under the statue law even though it is not literally; and finally the golden rule, which essentially allows the judge to avoid an absurd result. (It's relatively similar under Scots law, and I cannot comment as to elsewhere.)
  - DannyBee 10y ago
    Wait what? in the US, laws are judged on exact wording first, and then intent only if the wording is unclear.
- bambax 10y ago
  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!
  - deleted 10y ago
    [deleted]
  - charlesdm 10y ago
    Who says they don't have activities in Ireland? A lot of Google's employees are actually based in Ireland. > Just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation. Most countries have laws that say you can't do something JUST for tax purposes. You can, however, structure things in a tax friendly way, if there's a commercial motive to do so.
    - ucaetano 10y ago
      http://www.independent.ie/business/technology/google-hits-5000-employee-level-in-dublin-now-one-of-capitals-biggest-employers-31480103.html http://www.independent.ie/business/technology/google-hits-50... Over 5k employees apparently.
      - charlesdm 10y ago
        If that's not sufficient substance then I don't know what is. Yes, obviously they structured it like that intentionally and Ireland is happy with them being there. But it seems reasonable for a structure like that to fall within the scope of the law.
- partiallypro 10y ago
  It's illegal when the government is short of cash, I guess.
- bksjdf 10y ago
  'using legal methods' could mean using lawyers/law firms to hide their illegal tax activities.
- SEJeff 10y ago
  Also, remember that they have a legally binding fiduciary duty to their shareholders to maximize shareholder value. If they know they can pay (made up numbers) 5% effective tax instead of 20% tax, they are obligated to. The proper solution instead of raiding these firms, is to fix the tax laws that make this possible in the first place.
- Kell 10y ago
  Disclosure : French law is my field of work but I only have knowledge of this case by the media (which is terrible in legal matters in France, really, worse than the US sometimes). It seems that the prosecutors are using a small clause in the French Irish tax treaty saying that the taxation rules applying to a corporation officially incorporated in Ireland are different (implying much higher than the Irish 12.5%), if this corporation has a "stable establishment" in France. The prosecutor is arguing that this applies to Google, so that paying only the Irish 12.5% was illegal. So no, they are not being accused of using legal methods to minimise their tax bills. The main problem is actually a even more complicated. It rests on the understanding of the wording of the convention relating to the words "Fixed installation of affairs used only for purposes of advertising (...)" (those are exempted from the "stable establishment" exemption).Google argues that their advertising business makes them exempt to it. Meanwhile French prosecutors argue this clause is intended for companies advertising their own products (imagine Tesla having an agency in France advertising the Tesla cars because they intend to open a point of sale in France, but not selling them yet), not the actual sale of advertisement space like Google do. And frankly when reading the elements of the convention the Prosecutors have made public... they seem to have a pretty solid ground. PS : Yay at last, being a tech fan with french legal background is useful !
  - robert_foss 10y ago
    Thank you, that was really helpful.
  - hvalika 10y ago
    Thanks Kell - I must ask - did Google ever approach the French Revenue Authorities and try to get a ruling ahead of time? I assume they are arguing that Google does not have a permanent establishment in France.
    - Kell 10y ago
      We don't know if they tried to get a tax ruling beforehand. And unfortunately I'm not familiar enough with the case to speculate on it.
- kafkaesq 10y ago
  The sentence you're quoting refers to the actions of other companies which have come under scrutiny. The BBC article itself doesn't explain the reason behind the raid on Google's office.
- jahewson 10y ago
  You've misread the sentence. I'll grant it's not clear, but this sentence follows the fairly common British form of "legal methods" meaning "acts involving lawyers", not "acts which are not illegal". So this BBC article is simply stating that various companies have been accused of engaging in legalistic and accounting techniques to minimise their tax bills. Nothing is suggested about whether or not those techniques are illegal. Tax evasion is certainly illegal though!
te_chris 10y ago
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 10y ago
  >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.
  - cscurmudgeon 10y ago
    Except Google was heavily dependent on funding from various branches of the USG in its early stages. Search for it. > case a search engine that's miles ahead of its closest competitor, Bing Thats debatable. Any blind studies?
    - logicchains 10y ago
      >Except Google was heavily dependent on funding from various branches of the USG in its early stages. Search for it. But that funding could have came from anywhere. Just because the government funded something, doesn't mean that the thing would never be funded if the government didn't fund it. >Thats debatable. Any blind studies? Entirely anecdotal, but I've never met anyone who tried Bing and didn't switch back to Google after finding it flounders with more complex searches. I'm not sure how one'd go about designing such a study, to avoid favouring one search engine by inadvertently testing queries it's more suited to (or picking people who make queries more suited to one than the other). Or how quality of results would be measured. One somewhat empirical measure: Google has a much larger market share.
6stringmerc 10y ago
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).
0xFFC 10y ago
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.
- unlinker 10y ago
  I understand Microsoft is making progress, but I can't see how the are positioning themselves very well against Google in the markets they compete on.
  - NetStrikeForce 10y ago
    I can only think of one or two. Windows being the most used desktop OS and Cloud: Azure being bigger, with more offerings and more than double market share than Google's Cloud. E.g.: https://www.statista.com/chart/4546/cloud-infrastructure-market-share-2015/ https://www.statista.com/chart/4546/cloud-infrastructure-mar...
- ocdtrekkie 10y ago
  When you couple that with Google's internal issues in terms of maintaining ad revenue, and not finding a lot of successful alternative revenue streams as well... Google's issues are closing in on all sides. Microsoft is in a good position right now, in the short term, Apple is on certain fronts as well. (Mobile would go to Apple in the short term, though OEMs looking to escape Android might take a new look at wherever Windows Phone gets to in the next year or two of development work.)
  - bitmapbrother 10y ago
    Microsoft is even in more dire straits. They're reliant on a desktop OS that is in constant decline and their enterprise revenue is being attacked by all angles. As for OEM's looking to expand to Windows phone they need to look no farther than what happened to the Nokia devision division to see their fate. In mobile it's all about ecosystems and Microsoft will never have a competitive one.
criddell 10y ago
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?
- deleted 10y ago
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- _wmd 10y ago
  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 10y ago
    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...
deleted 10y ago
[deleted]
dmfdmf 10y ago
When asked by a reporter why the tax agents raided Google he replied "Because that's were the money is".
- allendoerfer 10y ago
  What's wrong with that? You would expect a food inspector to control places "where meat is".
  - zevyoura 10y ago
    It's a joke referencing Sutton's Law: https://en.wikipedia.org/wiki/Sutton%27s_law https://en.wikipedia.org/wiki/Sutton%27s_law
mizchief2 10y ago
If I were a big enough company like google, I would tell the French gov. to fuck off and block any access to Google services from French IP addresses. Then once the people throw out the corrupt politicians making these laws I would consider doing business in that country again.
ChuckMcM 10y ago
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 10y ago
  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-nearly-quarter-u-s-corporate-cash/ http://www.geekwire.com/2016/apple-microsoft-google-hold-nea...
  - ChuckMcM 10y ago
    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 10y ago
      > 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.
curiousgal 10y ago
>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 10y ago
  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_raided_in_paris_eur_16bn_tax_fraud/d3hon2q https://www.reddit.com/r/news/comments/4ktdm2/google_hq_raid...
  - curiousgal 10y ago
    Is it unusual to be a user of both Reddit and HN? I didn't think the two were mutually exclusive.
    - tyrust 10y ago
      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 10y ago
        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.
bunkydoo 10y ago
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 10y ago
  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.
kafkaesq 10y ago
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-raid-googles-paris-offices-in-1-7-billion-tax-fraud-money-laundering-probe/ http://sanfrancisco.cbslocal.com/2016/05/24/french-police-ra...

228 points by vmarovic 10y ago

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 :)

Isamu 10y ago

"Several have been accused of using legal methods to minimise their tax bills." I don't see this ending well.

ersii 10y ago

"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.

hrnnnnnn 10y ago
It's not the most eloquent phrasing. I think what they're trying to say is "People find legalistic tax-dodging unethical, and they're sick of rich people and big companies getting away with it."
- derekp7 10y ago
  In other words, they found a bug in the way the law is written, and they are exploiting that flaw to their benefit.
  - batmansmk 10y ago
    Yes, and it is forbidden, as in France what matters is the spirit of the law and not the way it is expressed. It helps keeping common sense upfront; keeping readable and compact text laws.
    - ptaipale 10y ago
      That sounds somewhat scary. The law is not what is written, but what someone says is the "spirit" of it? The end result is going to depend on who gets to interpret the spirit, and this idea is frightening.
      - derekp7 10y ago
        Isn't that almost how laws in the US actually work in practice? It isn't about what is written, but how it is interpreted by a judge, and possibly re-interpreted upon appeal(s)? So you have the written law, but also case law on top of it (so to figure out if you are breaking the law, you need to see how your situation compares to the possibly hundreds of somewhat similar but possibly subtly different cases that have already been decided).
- lloyd-christmas 10y ago
  Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring about corporate tax loopholes.
  - ciaranm 10y ago
    Most people in Europe don't need Lawyers to submit their taxes. In fact, until I started my own company (UK) - I didn't 'submit' taxes. It was calculated (and taken) automatically based on my salary and otherwise declared income.
    - charlesdm 10y ago
      This depends a lot on the country. For example: I'd say most self employed people in Belgium use an accountant to file their taxes. Some (a subset) of those also have a tax lawyer who helps them optimise certain things. Self employed people (i.e. entrepreneurs) who make decent money will have a tax lawyer, because inevitably, you'll bump into an unfriendly tax collector somewhere down the road.
      - emp_zealoth 10y ago
        From my experiences with self-employed people (doctors, hundreds of them - im in an MD-motorcycle club) they will try to write off anything and everything and the accountants are there to talk them out of it
        charlesdm 10y ago
        That's only because those tax deductions are often accepted. If one can write off an entire holiday home with a reasonable chance of success, say 80%, then you'd be crazy not to try. If countries don't want that, they should change their laws. In some higher tax countries, a lot of things are technically allowed, because that way they can tax "the little man" a lot and not tax higher earners as much (i.e. doctors, notaries, high earning entrepreneurs, etc).
      - 10y ago
- charlesdm 10y ago
  So let's raid the place. Excellent idea. Which judge is going to issue a judgement against Google if they're not breaking any tax laws? I would expect any issues to pop up quite fast during a routine audit of their accounts. This almost feels like blackmail. Pay up, or we'll keep harassing you, raiding your offices etc.
- deleted 10y ago
  [deleted]
- JoshTriplett 10y ago
  If you don't like the tax law as written, change it. Until then, following the law as written is perfectly reasonable.
onli 10y ago
In Louis Begleys Matters of Honour, there is a similar passage. A big international company in France uses loopholes to not pay taxes, until France strikes back with devastating outcome for the company (don't worry, knowing that spoils nothing important). I think the point is that countries make the law, and companies thinking they can use use the law to act against the interest of countries won't end well. There is precedent.
realusername 10y ago
All the laws are judged on intent, not on the exact wording, why would finance laws be any different than the other ones ?
- mike_hearn 10y ago
  No, people are judged on intent. Laws are meant to be applied as written. That's why you hear about people getting off on a technicality, and why you hear about obviously dumb rulings like two teenagers who get into a relationship and end up guilty of paedophilia. That obviously wasn't the intent of the lawmakers, but it's the result of the law as written. The notion of intent is a very important protection in law ... for the accused. For lawmakers, not so much.
  - gsnedders 10y ago
    > Laws are meant to be applied as written. That's why you hear about people getting off on a technicality, and why you hear about obviously dumb rulings like two teenagers who get into a relationship and end up guilty of paedophilia. This isn't true in the English legal system, which seems worthwhile to note given its wide reaching influence. When dealing with statue law (because obviously common law cannot be applied as written!), judges have three options as to how to interpret the law: the literal rule, where the law is interpreted literally as written; the mischief rule, where something that would have been judged illegal under common law can be judged to have been intended to be illegal under the statue law even though it is not literally; and finally the golden rule, which essentially allows the judge to avoid an absurd result. (It's relatively similar under Scots law, and I cannot comment as to elsewhere.)
- DannyBee 10y ago
  Wait what? in the US, laws are judged on exact wording first, and then intent only if the wording is unclear.
bambax 10y ago
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!
- deleted 10y ago
  [deleted]
- charlesdm 10y ago
  Who says they don't have activities in Ireland? A lot of Google's employees are actually based in Ireland. > Just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation. Most countries have laws that say you can't do something JUST for tax purposes. You can, however, structure things in a tax friendly way, if there's a commercial motive to do so.
  - ucaetano 10y ago
    http://www.independent.ie/business/technology/google-hits-5000-employee-level-in-dublin-now-one-of-capitals-biggest-employers-31480103.html http://www.independent.ie/business/technology/google-hits-50... Over 5k employees apparently.
    - charlesdm 10y ago
      If that's not sufficient substance then I don't know what is. Yes, obviously they structured it like that intentionally and Ireland is happy with them being there. But it seems reasonable for a structure like that to fall within the scope of the law.
partiallypro 10y ago
It's illegal when the government is short of cash, I guess.
bksjdf 10y ago
'using legal methods' could mean using lawyers/law firms to hide their illegal tax activities.
SEJeff 10y ago
Also, remember that they have a legally binding fiduciary duty to their shareholders to maximize shareholder value. If they know they can pay (made up numbers) 5% effective tax instead of 20% tax, they are obligated to. The proper solution instead of raiding these firms, is to fix the tax laws that make this possible in the first place.
Kell 10y ago
Disclosure : French law is my field of work but I only have knowledge of this case by the media (which is terrible in legal matters in France, really, worse than the US sometimes). It seems that the prosecutors are using a small clause in the French Irish tax treaty saying that the taxation rules applying to a corporation officially incorporated in Ireland are different (implying much higher than the Irish 12.5%), if this corporation has a "stable establishment" in France. The prosecutor is arguing that this applies to Google, so that paying only the Irish 12.5% was illegal. So no, they are not being accused of using legal methods to minimise their tax bills. The main problem is actually a even more complicated. It rests on the understanding of the wording of the convention relating to the words "Fixed installation of affairs used only for purposes of advertising (...)" (those are exempted from the "stable establishment" exemption).Google argues that their advertising business makes them exempt to it. Meanwhile French prosecutors argue this clause is intended for companies advertising their own products (imagine Tesla having an agency in France advertising the Tesla cars because they intend to open a point of sale in France, but not selling them yet), not the actual sale of advertisement space like Google do. And frankly when reading the elements of the convention the Prosecutors have made public... they seem to have a pretty solid ground. PS : Yay at last, being a tech fan with french legal background is useful !
- robert_foss 10y ago
  Thank you, that was really helpful.
- hvalika 10y ago
  Thanks Kell - I must ask - did Google ever approach the French Revenue Authorities and try to get a ruling ahead of time? I assume they are arguing that Google does not have a permanent establishment in France.
  - Kell 10y ago
    We don't know if they tried to get a tax ruling beforehand. And unfortunately I'm not familiar enough with the case to speculate on it.
kafkaesq 10y ago
The sentence you're quoting refers to the actions of other companies which have come under scrutiny. The BBC article itself doesn't explain the reason behind the raid on Google's office.
jahewson 10y ago
You've misread the sentence. I'll grant it's not clear, but this sentence follows the fairly common British form of "legal methods" meaning "acts involving lawyers", not "acts which are not illegal". So this BBC article is simply stating that various companies have been accused of engaging in legalistic and accounting techniques to minimise their tax bills. Nothing is suggested about whether or not those techniques are illegal. Tax evasion is certainly illegal though!

te_chris 10y ago

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 10y ago
>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.
- cscurmudgeon 10y ago
  Except Google was heavily dependent on funding from various branches of the USG in its early stages. Search for it. > case a search engine that's miles ahead of its closest competitor, Bing Thats debatable. Any blind studies?
  - logicchains 10y ago
    >Except Google was heavily dependent on funding from various branches of the USG in its early stages. Search for it. But that funding could have came from anywhere. Just because the government funded something, doesn't mean that the thing would never be funded if the government didn't fund it. >Thats debatable. Any blind studies? Entirely anecdotal, but I've never met anyone who tried Bing and didn't switch back to Google after finding it flounders with more complex searches. I'm not sure how one'd go about designing such a study, to avoid favouring one search engine by inadvertently testing queries it's more suited to (or picking people who make queries more suited to one than the other). Or how quality of results would be measured. One somewhat empirical measure: Google has a much larger market share.

6stringmerc 10y ago

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).

0xFFC 10y ago

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.

unlinker 10y ago
I understand Microsoft is making progress, but I can't see how the are positioning themselves very well against Google in the markets they compete on.
- NetStrikeForce 10y ago
  I can only think of one or two. Windows being the most used desktop OS and Cloud: Azure being bigger, with more offerings and more than double market share than Google's Cloud. E.g.: https://www.statista.com/chart/4546/cloud-infrastructure-market-share-2015/ https://www.statista.com/chart/4546/cloud-infrastructure-mar...
ocdtrekkie 10y ago
When you couple that with Google's internal issues in terms of maintaining ad revenue, and not finding a lot of successful alternative revenue streams as well... Google's issues are closing in on all sides. Microsoft is in a good position right now, in the short term, Apple is on certain fronts as well. (Mobile would go to Apple in the short term, though OEMs looking to escape Android might take a new look at wherever Windows Phone gets to in the next year or two of development work.)
- bitmapbrother 10y ago
  Microsoft is even in more dire straits. They're reliant on a desktop OS that is in constant decline and their enterprise revenue is being attacked by all angles. As for OEM's looking to expand to Windows phone they need to look no farther than what happened to the Nokia devision division to see their fate. In mobile it's all about ecosystems and Microsoft will never have a competitive one.

criddell 10y ago

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?

deleted 10y ago
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_wmd 10y ago
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 10y ago
  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...

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dmfdmf 10y ago

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

allendoerfer 10y ago
What's wrong with that? You would expect a food inspector to control places "where meat is".
- zevyoura 10y ago
  It's a joke referencing Sutton's Law: https://en.wikipedia.org/wiki/Sutton%27s_law https://en.wikipedia.org/wiki/Sutton%27s_law

mizchief2 10y ago

If I were a big enough company like google, I would tell the French gov. to fuck off and block any access to Google services from French IP addresses. Then once the people throw out the corrupt politicians making these laws I would consider doing business in that country again.

ChuckMcM 10y ago

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 10y ago
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-nearly-quarter-u-s-corporate-cash/ http://www.geekwire.com/2016/apple-microsoft-google-hold-nea...
- ChuckMcM 10y ago
  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 10y ago
    > 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.

curiousgal 10y ago

>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 10y ago
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_raided_in_paris_eur_16bn_tax_fraud/d3hon2q https://www.reddit.com/r/news/comments/4ktdm2/google_hq_raid...
- curiousgal 10y ago
  Is it unusual to be a user of both Reddit and HN? I didn't think the two were mutually exclusive.
  - tyrust 10y ago
    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 10y ago
      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.

bunkydoo 10y ago

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 10y ago
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.

kafkaesq 10y ago

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