France demands £1.3bn tax from Google - dwarfing UK payment

As MPs slam the 'disproportionately small' amount of tax the government's clawed back from Google, it's been revealed that France is set to do rather better.

The country's tax authority is demanding £1.3 billion in back tax from the internet giant, says the AFP news agency - ten times as much as the UK's HMRC was prepared to accept.

And while the UK was prepared to let Google negotiate its bill down, French finance minister Michel Sapin has previously said he won't do.

The demand follows the news that Italy is asking Google for more than £160 million in back taxes.

The news fuels the pressure on George Osborne to revisit the deal struck with Google last month. This allowed the company to pay just £130 million in back tax for the last ten years - and didn't even include the £100 for late payment that lesser taxpayers are forced to fork out.

And while the deal was hailed as a 'victory' by chancellor George Osborne at the time, the Public Accounts Committee (PAC) takes a different view in a report into the settlement published yesterday.

"We are concerned that HMRC appears to have settled for less corporation tax from Google than other countries are willing to accept. It is reported that the French and Italian tax authorities have ongoing investigations into Google, and that the amount of tax they believe is due is much larger than the £130 million settlement agreed with HMRC," it concludes.

"Although we cannot verify those claims, it does appear that other tax authorities have been more challenging in their assessment of Google's tax position."

While Google insists it has kept strictly within the rules, the committee describes this claim as 'disingenuous'. "There is nothing in the rules that says you must set up two companies in Ireland and send large royalty payments, via the Netherlands, to a company that is tax resident in Bermuda," the report points out.

The MPs are now putting pressure on HMRC to keep a careful watch on how other countries perform in getting Google to pay up, and says that HMRC should reopen negotiations if any new evidence emerges.

Earlier this month, Meg Hillier, who chairs the PAC, grilled Google's European president Matt Brittin over the company's accounts.

It was confirmed that Google had had revenues of £1.18 billion in the UK over the past 18 months, with 11% of the company's global sales to customers taking place in the UK.