Microsoft's French offices gets visit from tax inspectors

Microsoft has had its share of financial issues lately. This week, the company said it was taking a non-cash $6.2 billion write down on its 2007 acquisition of the Internet ad company aQuantive. Now there's word that Microsoft might be in some trouble with the French government on how it handles its taxes.

PCWorld.com reports that last week, 67 tax inspectors, accompanied by 30 police officers, came to pay a visit to Microsoft's French offices, located in Issy-les-Moulineaux. Microsoft sent out a statement comfirming the visit, adding, "This was part of a routine check and, as for any administrative or tax procedure, we remain at the disposal of the authorities."

However, it's looking like the inspectors were not making a social call on Microsoft's offices. GigaOM.com reports that the French government is looking into whether or not Microsoft has committed tax fraud. At issue is whether or not Microsoft tried to move some of the money earned in its French operations to other offices outside the country in order to avoid paying France's 33 percent corporate tax rate.

In addition to the tax inspection, the French offices at Microsoft also announced this week their first ever layoffs, impacting 30 people in its advertising and online divisions. Microsoft said the layoffs and last week's tax inspection were not related.

Source: PCWorld.com

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France just levied a huge new tax against the wealthy today. They are simply trying to gouge any moneybags they can find to fund their unsustainable welfare state, that's all there is to this.

At issue is whether or not Microsoft tried to move some of the money earned in its French operations to other offices outside the country in order to avoid paying France's 33 percent corporate tax rate.

Wait a minute. This isn't legal in France?
I thought that's why companies set up in countries with lower tax rates.
Didn't someone from neowin do an piece about a year ago about Google doing the same thing in the US.
Oh, but there it's legal.

Every individual has a right to avoid paying more tax than they absolutely have to. I'm pretty sure that's how Jimmy Carr summed it up

I don't see where the problem is. Just pay off some politicians,....err.....I mean "make a donation to their campaign fund" and the problem goes away.

mrpakiman said,
correct me if i am wrong but i think is illegal to make a donation to a campaign fund in France.

Yeah, but there many way to by pass this system. Donation can't be more than 7000€ but each politician create thier own party, so you can donate Xx7000€ to politician that belong to the same party.
Anyway, the amount of donation are far less of what we can see in US. The french president spent something like 23 million € for his campaign.
In france you can't make ads like you can see in US and

Yossarian1 said,

Yeah, but there many way to by pass this system. Donation can't be more than 7000€ but each politician create thier own party, so you can donate Xx7000€ to politician that belong to the same party.
Anyway, the amount of donation are far less of what we can see in US. The french president spent something like 23 million € for his campaign.
In france you can't make ads like you can see in US and ...

... Primaries doesn't last as long as yours

Tim Dawg said,
I don't see where the problem is. Just pay off some politicians,....err.....I mean "make a donation to their campaign fund" and the problem goes away.

They did but now they are realizing that they bet for the wrong horse.

Corporations are trying to evade taxes, surprised: -

Luckily we have White Cape Crusaders defending these same people in the politics forums. Heh.

Josh_LosAltosHills said,
33% is alot. Yet their having financial problems (like alot of other countries). Where is that money going?

Health care, education, stuff like that... yeah I know, France sucks in an American POV.
You know, socialism is here now (i can see the thrill on you)

Big society have, in theory, 33% taxe rate but they can avoid to pay it with legal financial mecanism, sometimes in a lower rate than smaller enterprise.
I mean it's not like the average Joe the Plumber (I know the story but you see what i mean) who struggle for its own little business. They make big amount of money, they HAVE to pay. And I think that micro$oft is clearly able to pay that amount of money.

Sorry for my English, i'm french as you may have guess :-)

Josh_LosAltosHills said,
33% is alot

Is it? Individuals can pay up to 45% tax in some countries, and soon millionaires 75% in France. Why should corporations get away unscathed? After all, many of the rich exploit corporate exemptions to fiddle the system. Case in point, here in the UK, the rich buy their properties through shell companies so that they don't pay stamp duty (government tax on a purchase of a property).

I'm of the thinking that if everyone played fair then some of these tax rates would be lowered due to more money in the pot... Then again maybe I'm too trusting of the government(s). It's a shame governments don't seem to be taking a strong stance on the loopholes though.

I'm currently living in Belgium. The tax rates are internationally mocked.

simplezz said,

Is it? Individuals can pay up to 45% tax in some countries, and soon millionaires 75% in France. Why should corporations get away unscathed? After all, many of the rich exploit corporate exemptions to fiddle the system. Case in point, here in the UK, the rich buy their properties through shell companies so that they don't pay stamp duty (government tax on a purchase of a property).

First, that 33% is far from the only time that income is hit with a tax. Corporations are taxed repeatedly on the same income. Just an FYI, because from your post it doesn't seem that you realized this. Regardless, they are hardly getting away unscathed.

Second, this 75% tax rate is going to bite France in the butt. They are enacting it now because they are greedy and rather than trim some of the fat and unnecessary government, they will continue to grow the government and further burden their citizens and corporations. This will in the end hurt their economic growth and sustainability. The bigger government gets the bigger the strain they put on the economy. The goal should always be lean government.

And Third, the reason the rich purchase property through corporations, trusts, and equity companies has less to do with dodging taxes (Which these corporations do then have to pay, it's not a free ride... LOL) than you seem to think. They do so mainly to protect their assets. These people get sued a lot. Sometimes legitimately, sometimes just as a money grab. This protects their property the same as we would attempt to do. In all honesty no one should personally own their property for this reason alone.

if the money was made in france and then moved it shouldn't matter MS still need to pay tax on it apparently this loophole appears in most countries and is one that should be closed so it's paper tight

Athlonite said,
if the money was made in france and then moved it shouldn't matter MS still need to pay tax on it apparently this loophole appears in most countries and is one that should be closed so it's paper tight

If it was made in France I guarantee taxes were already paid on it. What these countries like to do anymore is apply a tax every time a company does something. It's not fair when we are taxed multiple times on money, and this shouldn't be the case for companies either. It causes these companies to tighten when they could be driving some economic growth. Instead they are funding big, inefficient, government. Government should be as small and lean as it can be, as the larger it is the bigger the strain it puts on their economies...

Probably nothing much going on here though. Countries with high corporate tax rates generally have a "guilty until proven innocent" approach to things and act more like thugs than officers attempting to ensure compliance...

And honestly, I would imagine any money that may have been moved was done so legally as Microsoft has a pretty good reputation in this area. If France wanted the money in France they should have a more reasonable tax on corporations anyway.

I'm on mobile so can't file an error report, but it wasn't a write off, but a write down... They're two very different things...