PARIS (CBS/AP) — French police have raided Google’s Paris offices as part of an investigation into “aggravated tax fraud” and money laundering, authorities said Tuesday. The raid is the latest regulatory headache for the American search engine-and-email company, which like other Silicon Valley firms faces increasing questions about its complex tax arrangements.
French authorities believe Google owes $1.7 billion in back taxes, according to a French finance ministry source.
France’s financial prosecutor’s office said the raids were carried out with the assistance of the police anti-corruption unit and 25 information technology experts. French daily Le Parisien, which first reported the news, said the raid took place at dawn and involved some 100 investigators. Officers were still at the scene Tuesday afternoon.
“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 prosecutor’s office said in a statement. “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.”
Google Inc. and other American technology companies typically base their European subsidiaries in Ireland or other low-tax jurisdictions such as Luxembourg, allowing them to do business with customers across the continent while minimizing their fiscal obligations — a technique known as profit-shifting. European regulators have increasingly pressed the firms to pay taxes in the jurisdictions in which they do business.
Google is under pressure elsewhere. Earlier this year the company agreed to pay about 130 million pounds ($140 million) in back taxes to the British government, a deal which drew the attention of European investigators. Google’s rivals have faced similar pressures: in December Apple agreed to pay Italy 318 million euros (about $350 million) in taxes for several past years.
Google declined to go into detail when reached for comment.
“We comply with French law and are cooperating fully with the authorities to answer their questions,” the company said in statement.
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