Google wins again in French court fight over $1B tax bill

Google won another round in its fight against a 1.1 billion-euro ($1.2 billion) French tax bill after a second court rejected claims the search-engine giant abused loopholes to avoid paying its fair share.

The Paris administrative court of appeals on Thursday confirmed a 2017 ruling at a lower tribunal that wiped out the French tax authority’s claim, saying its reasoning was sound. The lower court found that Google didn’t illegally dodge French taxes by routing sales through Ireland.

Paris judges confirmed that the conditions to tax Google Ireland as if it had a permanent French base weren’t met as the local unit didn’t have the sufficient autonomy from the Irish headquarters. The lower court underlined that the French unit’s employees couldn’t accept online advertising requests from local clients, requiring approval from executives in Ireland.

In a parallel criminal case, French prosecutors raided the Alphabet Inc. unit’s Paris office in May 2016 after months of preparation spent offline to prevent leaks. That probe, which hasn’t resurfaced in the past three years, similarly seeks to verify whether Google’s Irish unit failed to declare part of its income in France.

Google said the ruling in the civil court case confirms that it abides by French tax rules and international standards.

“However, we understand it is necessary to upgrade the international taxation system,” Google said in an emailed statement, adding that the company backs initiatives spearheaded by the Organisation for Economic Co-Operation and Development.

Representatives of the French authorities didn’t immediately respond to requests for comment. The ruling can still be appealed at France’s top administrative court.

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A sign featuring Google Inc.'s logo stands at the company's Asia-Pacific headquarters during its opening day in Singapore, on Thursday, Nov. 10, 2016. Google officially opened its new hub in Singapore today. Photographer: Ore Huiying/Bloomberg