An administrative court in Paris has ruled that Google is not liable for EUR1.1bn (USD1.25bn) in unpaid taxes, dealing a blow to the tax authority's anti-tax avoidance campaign against multinational companies.
The court said that Google's Irish subsidiary did not have a permanent establishment in France and was therefore not required to pay the disputed sum.
"Google Ireland Ltd is not taxable in France over the period 2005-2010," the court said in a statement.
The basis of the French Government's challenge to Google's tax position was that it paid minimal corporate tax in France despite deriving substantial revenues in the country during the period in question. It says that Google's French income was routed to Ireland, where corporate tax is 12.5 percent, to avoid French corporate tax, which is currently 33 percent.
In reaching the verdict, judges agreed with the opinion of an administrative court adviser, who decided last month that Google was not liable for the EUR1.1bn back tax bill because the company did not have a sufficiently large physical presence in France.
Google's offices in Paris were raided by more than 100 investigators on behalf of France's tax authority in May 2016. France's prosecutor's office said at the time that the "searches are the result of a preliminary investigation opened on June 16, 2015, relative to aggravated tax fraud and organized money laundering."
"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," prosecutors added.