Booking.com under attack by French tax authorities

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The hotel reservation site Booking.com owes 356 million euros in unpaid value-added tax and income tax, French tax authorities claim. This came to light after a financial inspection into the company’s affairs which began in 2013.

The claim was revealed in a filing by Priceline Group, Booking.com’s parent company (which is a company that owns enough voting stock in another firm to control management and operation) to the US Securities and Exchange Commission. As a result of the filing, the French tax authorities came to the conclusion that Booking.com has a permanent establishment in France, and is therefore liable to pay additional VAT and income tax.

This was decided in a formal assessment of the reservation site in December of 2015. Most of the 356 million euros consist of interest and penalties; “in December 2015, the French tax authorities issued Booking.com assessments for approximately 356m euros, the majority of which would represent penalties and interest” the Securities and Exchange Commission said, according to BBC news.

Booking.com’s parent company, Priceline Group, said that it plans to appeal the assessments, but the company may have to pay the full amount or a significant part of the amount claimed by the tax authorities until the case is resolved.

Priceline Group said that “we believe that Booking.com has been, and continues to be, in compliance with French tax law and we intend to contest the assessments.” It also said that “if we are unable to resolve the matter with the French authorities, we would expect to challenge the assessments in the French courts.” In the same filing, Priceline stated that the Italian tax authorities were examining whether Booking.com should also be liable to pay additional tax in Italy.

Google’s headquarters in France were also inspected as part of an investigation into possible tax evasion. It has been revealed by magistrates in France that Google is suspected of tax evasion because it does not declare the extent of its activities in the country. The question is whether Google has a permanent establishment in France, as the software giant channels most of its European income through an Irish company, where corporation tax is 12.5% which is particularly low in comparison to most other European countries. In a released statement, Google stated that “we comply with French law and are cooperating fully with the authorities to answer their questions.” The PNF (State Financial Prosecutor) stated that “these searches form part of a preliminary enquiry opened on 16 June 2015 relating to acts of aggravated financial fraud and organised laundering of aggravated financial fraud, following a complaint from the French tax authorities”, according to The Guardian.

Earlier this year in the UK, Google reached an agreement to pay 130m pounds to the Treasury. This, however, was viewed by opposition MPs and tax campaigners as continuing to allow Google to conduct its business through Ireland. In contrast, France’s tax office continues to avoid striking a deal with Google, as the UK had.

The software giant denies claims that it has done anything unlawful.

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