Monday 16 December 2019

French authorities raid Adobe office over Irish tax claim

Paris judge throws out firm's case that Paris office raid last year was illegal

French president Emmanuel Macron has been a vocal advocate of an international tax on digital companies. Photo: REUTERS
French president Emmanuel Macron has been a vocal advocate of an international tax on digital companies. Photo: REUTERS

Sean Pollock

Adobe, a computer software developer, had its office in Paris raided by French tax officials looking for evidence the US company had dodged tax by shifting revenue to Ireland.

According to a recent court ruling, seen by Bloomberg Tax, France's tax authority sent officials to the Paris office on April 26, 2018, on suspicion Adobe had misled it on the level of revenue generated in France. A Paris judge tossed out the Adobe lawsuit, which claimed the raid on its office was illegal.

In response to questions from the Sunday Independent, Adobe said it continues to engage with French authorities on tax matters. "Adobe complies with the tax rules in all the countries around the world in which we do business," said a statement.

"We continue to co-operate and engage with the French tax administration on all relevant taxation matters which are ongoing."

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Adobe could still submit an appeal over the decision to France's highest court.

The investigation into Adobe followed reports the French subsidiary had staff members with sales jobs.

According to the French tax authorities, Adobe Systems France's only reported activity was to provide services to one client, Adobe Systems Ireland, which serves markets outside North America. The authorities decided to investigate this mismatch, suspecting the Irish unit was using French staff and expertise to make sales without paying the appropriate tax.

The French rulings specify Adobe France had revenue of between €30m and €42m from 2014 to 2016 and declared it provided services to the Irish firm for nearly equivalent amounts annually. The ruling did not specify the amount of tax paid in France.

Company tax in France is 31pc for businesses with an annual turnover below €250m and 33.33pc for those with a yearly turnover of €250m and over. Ireland's corporation tax rate is 12.5pc for trading income.

Revenues at Adobe's Irish unit rose from $2.97bn (€2.69bn) to $3.83bn in the year to the end of November 2018. Operating profit soared 213pc to $168m, with Adobe paying a corporate tax bill of $77.8m. The Revenue Commissioners said it is legally precluded from making any comment about specific cases.

French president Emmanuel Macron has been a vocal advocate of an international tax on digital companies.

In September, Google settled a dispute with French authorities regarding sales routed through Ireland for almost €1bn.

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