The French police have raided Google (NASDAQ:GOOGL) Paris offices after a long investigation on allegations of tax fraud and money laundering. France’s office of financial prosecution explained to the press that the raids were conducted with the help of 25 information technology experts.
The prosecutor’s office said in a statement, “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 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.”
So far, Google’s comment on the issue was, “We comply with French law and are cooperating fully with the authorities to answer their questions.”
Google, as well as other Silicon Valley technology companies often base their international business offices in countries with generous tax rules like Ireland, which allows them to conduct business all across Europe and enjoy low fiscal tax expenses. A strategy known as profit-shifting.
In recent years companies were pressured into paying the tax rate required by the country where the business are conducted. Last year Apple (NASDAQ:AAPL) reached an agreement with the Italian government to pay 318 million euros (about $350 million) in taxes fees.