Google’s Paris HQ raided by French police in tax fraud probe [Update]

Update: The financial prosecutor’s office has confirmed that the raid took place, and is part of an investigation in to tax evasion and money laundering. As reported by Reuters:

The investigation, which started in June last year, aims to verify whether Google Ireland Ltd (GOOGL.O) has failed in its fiscal obligations in France, the prosecutor’s office said in statement.

According to several breaking news reports, Google’s headquarters in Paris are being raided this morning by French investigators as part of a probe into the US company’s tax payments. Both Le Parisien and Reuters were informed by sources that a search is underway at the HQ in Paris’s 9th district.

It’s claimed that hundreds of tax officials and enforcement agents from the BRGDF (a French financial crime branch) have been on the premises since 5am local time (3am GMT/10pm Eastern).

“The operation was top secret, says a source. It was conducted without using the financial parquet courier to avoid leaks.

It’s claimed that France is seeking €1.6 billion ($1.8 billion USD) in back taxes from Google having used a number of loopholes to get out of paying tax in that country. If the search giant does end up paying, it would mean a much larger payback than the now infamous ‘Google-tax’ deal reached in the UK where the company only paid a comparatively small £185 million ($270 million USD).

Google has come under increased scrutiny in Europe in recent times. With lawsuits against it regarding anti-competitive practices in Android and other services, as well as the allegations of tax fraud, it’s safe to say the company isn’t getting an easy ride within the EU. In fact it may end up paying up to €3 billion in fines, if the European Commission’s allegations are proven.

Europe’s authorities specialising in competitive practices have also been examining whether or not some deals made by big multi-national corporations (like Google) with national tax authorities (like the UK’s HMRC) amount to illegal state aid.

Rules have since been made in Europe to force large companies to disclose more about their taxes, and will have to state publicly how much tax they pay in each individual EU country. They also need to disclose any ‘activities’ in certain tax havens.

We’ll update when/if we hear more on today’s covert investigation.