France demands $2.5 billion in back tax from Google: Sources

Google is one of several multinational corporations that have come under fire in Europe for paying extremely low taxes.
Google is one of several multinational corporations that have come under fire in Europe for paying extremely low taxes.PHOTO: REUTERS

PARIS (AFP) - French authorities have demanded that US Internet giant Google pay €1.6 billion (S$2.5 billion) in back taxes, a source close to the matter said Wednesday.

"In regards to France, a €1.6 billion adjustment has been imposed on the company," the source said.

The French finance ministry told AFP the amount Google would have to pay was subject to "fiscal confidentiality".

Google is one of several multinational corporations that have come under fire in Europe for paying extremely low taxes by shifting revenue across borders in an often complex web of financial arrangements.

France refused to negotiate the amount of back taxes it would request, unlike Britain which requested £130 million (S$255 million) from Google.

A panel of British lawmakers have denounced that settlement as ridiculously low given Google's size and earnings.

Italy is also demanding Google pay over €200 million in back taxes following an inquiry by the financial police.

The European Commission has cracked down hard on companies, including US icons such as Apple, Starbucks and Amazon, who have worked out arrangements with countries allowing them to slash their tax bills.

Swedish furniture giant Ikea has also been accused of underpaying taxes by €1 billion by using tax loopholes in certain European countries.