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Facebook to Pay France 106 Million Euros in Back Taxes

France digital tax Facebook

The battle between digital tech behemoths and governments throughout Europe continues.

In the latest chapter of this ongoing saga, Facebook has agreed to pay the French government 106 million Euros in back taxes following an investigation into the American company’s activities in the country from 2009 to 2018.

This figure includes 22 million Euros in penalties.

As reported by TechCrunch, the French authorities’ investigation found that Facebook had engaged in aggressive tax planning by “funneling sales to other subsidiaries in different European countries” yet failed “to prove that there wasn’t any sales person based in France selling to a French customer.”

Facebook will also pay France close to 8.5 million Euros in taxes for 2020, a figure that surpasses the previous year amount by 50 percent.

According to a Facebook spokesperson speaking to TechCrunch, the US tech giant “reached an agreement with the tax authorities covering the years 2009 – 2018, under which we will pay a settlement of 106 million euros. We take our tax obligations seriously and work closely with tax authorities around the world to ensure compliance with all applicable tax laws and to resolve any disputes, as we have done with the French tax authorities.”

The spokesperson added: ““We pay the taxes we owe in every market we operate. Since 2018, we have changed our selling structure so that revenue from advertisers supported by the team in France is now recorded in this country. This year, we are paying EUR8.46m in tax revenue in France, a nearly 50% increase on last year.”

The head of Facebook in France, Laurent Solly, spoke to Le Parisien and said, “Facebook will pay more and more taxes in France. That’s to be expected. In many ways, Facebook is now a French company too, so it is to be expected that we would change our financial declaration process. It was a question of justice.”

Facebook France digital tax

American companies including Google and Amazon have opted to negotiate directly with French tax authorities rather than engage in a prolonged battle involving courts and the public eye.

As reported by Accountancy Daily’s Pat Sweet, “Google agreed in an out-of-court settlement last year to pay €965m, comprising a penalty of €500m over charges of tax evasion, plus an additional €465m to settle claims with French tax authorities relating to how it booked digital sales. The same year Apple agreed to pay about €500m, while Amazon made a €200m payment in 2018.”

All of this comes at a time when European governments are looking to boost revenue to lessen the economic impact wrought on their countries by the coronavirus pandemic.

Back in June, finance ministers from the UK, Spain, France and Italy penned a letter directed at the US in which they asked American tech companies to contribute a fair amount in taxes to each country.

As reported by the BBC, the letter stated: “The current Covid-19 crisis has confirmed the need to deliver a fair and consistent allocation of profit made by multinationals operating without - or with little - physical taxable presence.”

“The pandemic has accelerated a fundamental transformation in consumption habits and increased the use of digital services, consequently reinforcing digital business models' dominant position and increasing their revenue at the expense of more traditional businesses,” the letter concluded.

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