Facebook To Pay France £96 Million In Back Taxes

Social networking giant Facebook has agreed to pay the French government 106 million euros (£96 million) in back taxes.

The payment will settle a tax dispute over revenues earned in the country, from 2009 to 2018.

In addition, Facebook will also pay 8.46 million euros (£7.6 million) in taxes on revenues in France in 2020 – a 50 percent rise on the tax it paid in 2019.

Tax settlements

This is not the first time that France has been able to achieve a significant payment from a big name tech firm, for back taxes.

In September 2019 for example, Alphabet’s Google agreed to pay French authorities nearly 1 billion euros (£897 million) to settle a fiscal fraud probe that began after Google’s Paris offices were raided back in 2016.

Facebook’s settlement with French tax authorities comes after its offices in France were raided in 2012, MarketWatch reported.

Facebook allegedly optimised its effective tax rate in France by routing sales to other subsidiaries in different European countries.

“We pay the taxes we owe in every market we operate,” a Facebook spokesperson was quoted as saying.

The spokesperson also noted that, since 2018, the company has changed its selling structure so that revenue from advertisers supported by their French offices is now recorded in France.

Besides Google and Facebook, French tax authorities have also previously targetted Amazon and Apple.

Apple settled with a $572 million in back taxes payment in 2019, whereas Amazon in 2018 settled in an undisclosed deal with French tax authorities.

French authorities had been seeking $252 million in unpaid taxes from Amazon.

Digital tax

Early in 2019 France imposed a digital tax on tech giants, amid growing outrage at the levels of tax these firms pay in local markets, much to the chagrin of President Donald Trump.

In June this year the United States withdrew from global tax reform negotiations being organised by the Organisation for Economic Cooperation and Development (OECD).

France offered to suspend its digital tax on tech companies’ income in France until the end of the year, while the OECD negotiated new rules for the cross-border taxation of big digital companies.

But it seems certain the French will impose its digital services tax this year, whether or not Washington returned to negotiations.

Tech companies have long been criticised by lawmakers for their tax practices that sees them reducing their tax bills by booking profits in low-tax countries (such as Ireland) regardless of the location of the end customer.