PARIS– Just a couple weeks after Google won its court case in France to avoid paying $1.3 billion in back taxes, Facebook made headlines in the country after a local report stated that the company had paid only 1.16 million Euros in income taxes in 2016.
The report, published on BFM Business and based on Facebook’s tax return for 2016, says Facebook declared 36.95 million euros of annual revenue in France and therefore paid 1.16 million in income taxes. However, Facebook made an estimated 540 million euros in France last year, based on the fact that it had 32 million monthly users in France who each brought 16.8 euros, according to the company’s filing.
If Facebook had declared 540 million euros in France, they would have to pay 80 million euros.
Reacting to the polemic, Facebook told Variety that it payed taxes required by laws wherever it operates.”
Like Google, Facebook has been avoiding paying high taxes in France (45% of the revenue) by routing sales made in the country through an Irish-based subsidiary. Facebook’s French office, located in Paris, is officially in charge of marketing and R&D.
Google, which was sued for owing $1.3 billion in back taxes in France, just won its legal battle after an administrative court ruled that Google’s Irish unit was not taxable in France. Google is believed to employ 700 people in France.
Asked about the tax situation of Google, Amazon, Facebook and Apple in France, Mounir Mahjoubi, the secretary of state in charge of digital affairs, told French journalists that these global companies must pay in France a “legitimate tax” in line with the business they are doing in France. He said the European commission had to weight in.
“Today, European law, French law, don’t allow us to tax these companies (…) because they are new operators who transform the model of an international form with transactions that are being routed under our radar.”
“But all of this is very legal. We are not saying that these companies are doing illegal things, we’re saying that it’s not morally acceptable.”
France President, Emmanuel Macron, also addressed the necessity to tax Google, Amazon, Facebook and Apple during the presidential race. He pledged to create a “cultural pass,” worth 500 euros for every French residents on their 18th birthday, which would be partly financed by a tax levied on these companies (Google, Amazon, Facebook and Apple).
French authors societies, including the SACD, have also initiated discussions with Facebook and Snapchat, among other global companies that have started producing scripted content locally, to have them pay royalties to French creatives.