Saturday, May 28, 2016

Google, McDonalds: justice seizes tax optimization – Challenges.fr

To see the two spectacular raids on May 18 at McDonald’s France and May 24 at Google France, champions multinational fixtures to reduce their zero tax have (finally) the need to worry. Because these searches were not tax raids conducted under the aegis of a handful of tax inspectors courteous curiosity limited by their very limited mandate, such as those already suffered by Amazon in 2010, Google in 2011 and Facebook in 2012 . No, this was legal searches carried out by the big battalions of policemen from the central Office of fight against corruption and financial and tax offenses (OCLCIFF) in any investigation for tax evasion and laundering, invest places so Blitzkrieg, can commandeer and poking around at will all documents, files and computers.

Optimization or fraud?

a change of gear indicative of a strategic shift in the fight against tax avoidance large groups. In times of budget shortages, after the crisis and scandal, HSBC, UBS, LuxLeaks, to Panama Papers, the fight against tax evasion, which has become a popular theme, has continued to be strengthened by tightening rules and repression. But so far, it was agreed that tax evasion was the prerogative of some wealthy individuals, hiding illegally undeclared nest egg, while the offending multinationals, they rather practiced tax optimization schemes of multiplying relying on sophisticated flaws of international law and the complacency of tax havens, thus managing to avoid paying taxes without contravening the law. For there to be convicted, the thin yellow line between optimization and fraud must be crossed. And fraud is defined by its intentional: “Faced with a timeline that uses the legal rules, it must be shown that there is abuse of law” says in Les Echos Fraud Specialist Charles Prats tax, that is to say a deliberate abuse of the rules for a purpose contrary to their spirit. It is difficult to prove, and that’s why the IRS rarely ventures to hang large companies in court.

Apart from some banks (UBS, HSBC) suspected of inciting mass their wealthy clients to defraud, complaints to court for tax fraud and similar offenses, thus relate usually that people (Guy Wildenstein, Jérôme Cahuzac, Patrick Balkany, Serge Dassault, Jean-Marie Le Pen …) but not companies, even when their avoidance practices are revealed and booed (like those of the American majors Web, but also Ikea, Starbucks …). Helped their armies of skilled lawyers, they will come out after negotiations with the IRS, with a discreet fine (covered by tax secrecy) not necessarily a deterrent.



The taxman wants the scalp Google

But facing Google, the french tax authorities decided to move up a gear. The US giant web was in 2011 within the scope of a tax audit, which resulted in a recovery (arrears and penalties), notified in March 2014, 1.3 billion according to Le Monde or 1.6 billion according to AFP. Clearly, the stakeholders are not agreed since the tax eventually file a complaint for aggravated tax fraud and organized gang fraud laundering, triggering the opening of a preliminary investigation by the national financial Parquet (PNF) the June 16, 2015.

following the search, conducted by no less than 75 police officers and judicial tax, supported by 25 iT experts, supervised by five judges of the PNF, the Secretary of State budget, Christian Eckert, drove the nail on the determination of the authorities, ensuring that “there is no transaction with the tax in this country” (unlike the UK where Google has negotiated a very favorable agreement repayment of 170 million to settle the past). But still the hardest: support the complaint. The PNF must prove that the US multinational has committed an offense by not reporting of the activities and taxable in France (income tax and value added tax), by having in France than a company representation that traces all the profits at the European headquarters in Ireland, as the company should have a status of genuine normally taxable subsidiary.

entourloupe seems obvious given the importance of the activity of Google France, but legal technicalities render the exercise of proof still delicate. If the IRS grows to try his luck in court, “it is surely for a question of image, because Bercy wants to show firmness in this iconic folder and create a balance of power”, decrypts an ex-laying the Financial Management. Christian Eckert, he says this is because “the tax authorities saw their investigative arsenal considerably strengthened in recent years and therefore more able to dissect the ups and build a strong case. In addition, the administration is also more confident in the courts to flesh out the investigation and will give full attention, since that were created in 2013 and the PNF OLCIFF, specialized in complex financial crimes. “

the EC wants to charge McDonald

in terms of McDonald’s, the complaint is not from the IRS but was filed in mid-December 2015 the Works Council of the fast food chain, represented by lawyer Eva Joly, with his colleague Pierre Lumbroso, resulting in the opening of a preliminary investigation early 2016 by the PNF. The charge is that of “tax fraud laundering by organized gangs” knowing that, by a quirk of French law, while only tax administration may file a complaint for tax evasion (the famous lock Bercy) any person or organization aggrieved can sue for the related offense of tax evasion laundering. McDonald’s, suspected of artificially reduce profits through royalties paid to its European base based in Luxembourg, is also in the sights of the tax authorities for more than two years. The PNF will support the EC’s expert reports that show “a cash flow system to the parent in order to play down restaurant profits with the result, no benefits, so no corporate taxes and not participation bonus for employees. “

the elected CGT and UNSA, the majority in McDonald’s CE, know that this approach is the road since the unions won a February victory against Wolters Kluwer France on the same basis. The Court of Appeal of Versailles had thus ruled that the Dutch group had committed a “fraudulent scheme” to siphon profits from its French subsidiary WKF (Lamy and Liaisons Group), depriving workers of their participation. The company was ordered to reconstitute the special reserve. Since the CGT has also attacked Nestlé France.

Attacked on one side by the tax authorities, the other by the unions, multinationals, which have long enjoyed a certain impunity their tax planning maneuvers, so now really have to worry about arriving in the crosshairs of justice … But only the law (still to be built) will tell if they are likely to emerge condemned.

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