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France demands €600 million in tax from Microsoft

France's tax authority is seeking 600 million euros ($715 million) from Microsoft's local subsidiary for billing French customers from Ireland, the weekly L'Express reported on Wednesday.

Published: 31 August 2017 09:00 CEST

France demands €600 million in tax from Microsoft

The magazine reported that the bills concerned internet advertising and keywords for internet searches.

Despite a considerable presence in France, Microsoft paid only 32.2 million euros in corporate tax there last year, according to L'Express.

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The French tax authority declined to comment, citing its policy to not discuss individual cases.

The US firm said only that it “acts in accordance with the laws and regulations in all the countries in which it operates, working in close cooperation with local tax authorities to ensure complete compliance with local laws.”

The 600 million euro figure is the second-largest amount France has sought in unpaid taxes from a high-tech multinational, after 1.1 billion euros recently sought from Google.

That case was similar as it concerned the billing of French clients via Ireland, which meant France did not collect revenue on the transactions.

However, in July a French court ruled in favour of Google in that case, considering that Google France didn't have a stable presence in the country and was only helping the Irish unit.

France's tax authority is appealing the ruling, but the government doesn't exclude a settlement.

US tech giants — including also Amazon, Apple and Facebook — have come under criticism for their tax optimisation policies, in particular using low-tax Ireland as their European headquarters and routing transactions through the country.

French President Emmanuel Macron campaigned on requiring internet firms to pay taxes to France on the business they conduct in the country.

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance?

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes.

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner.

How did the government agree to change the employment allowance in its coalition deal?

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment allowance to 12.75 percent up to a maximum rebate of 53,600 kroner.

How might this be further increased, according to Børsen?

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance.

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement.

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.

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