Finally A Glorious Growth Industry In France: Hounding Companies For Back Taxes And Penalties [Testosteronepit]
March 20, 2013 Leave a comment
For some companies—those that know how to leverage worldwide tax systems—France offers a free ride. But as the French government chases down the last euro in a vain effort to make ends meet, it’s not only going after multinationals and their tax optimization schemes but also smaller companies that, already taxed half to death, are gasping for air.
It didn’t help that Budget Minister Jérôme Cahuzac, an integral part of France’s high-tax strategy to whittle down its budget deficit, is suddenly under official investigation for “tax fraud laundering.” The crime, worse than plain-vanilla tax fraud, has two steps: committing tax fraud and acquiring with this money assets that can be sold legally. If it can be proven that he laundered his tax fraud habitually, he faces up to seven years in the hoosegow and up to €1 million in fines.
But even for corporate welfare queens, it’s getting complicated. Raids on internet companies have become media fodder. Microsoft, Yahoo, Amazon, and eBay were all raided, some with a very photogenic display of force. Google got tangled up when tax authorities raided Groupe Partouche’s online gambling operations and found invoices from Google. Not much later, they raided Google’s offices in Paris, suspecting it of selling online ads to French companies but declaring revenues from those transactions in low-tax Ireland instead of France.
“I am very proud of the structure that we set up,” explained Google Chairman Eric Schmidt when it became known that Google might have to pay €1.7 billion in back taxes and penalties. “We did it based on the incentives that the governments offered us to operate,” he added. “It’s called capitalism.”
“These optimization schemes are expanding from large companies to smaller ones,” Alexandre Gardette told the French paper, Les Echos. He’s the director of tax audits at the DVNI, the Finance Ministry’s Directorate of National and International Audits, responsible for auditing the 3,500 largest French companies.
Tax revenues have become such a priority that the Finance Ministry’s Directorate General of Public Finances (DGFiP) has a growth target for back taxes and penalties in its three-year plan: haul in €1 billion more in 2013.