French tax authorities carried out an audit on Facebook's accounts over the 2009-2018 period, which resulted in an agreement by the subsidiary to pay more than $118 million (106 million euros).

A 3D-printed Facebook logo is seen on a keyboard in this illustration taken. March 25, 2020.
A 3D-printed Facebook logo is seen on a keyboard in this illustration taken. March 25, 2020. (Reuters)

Facebook's French subsidiary has agreed to pay more than $118 million in back taxes, including a penalty, after a 10-year audit of its accounts by French tax authorities, the company has said.

France, which is pushing hard to overhaul international tax rules on digital companies such as Facebook, Alphabet's Google, Apple and Amazon, has said the big tech groups pay too little tax in the country where they have significant sales.

Current international tax rules legally allow companies to funnel sales generated in local markets in Europe to their regional headquarters. Some of the tech companies, including Facebook, have European or international headquarters based in countries with comparatively low corporate tax rates, such as Ireland.

A Facebook spokesman said French tax authorities carried out an audit on Facebook's accounts over the 2009-2018 period, which resulted in an agreement by the subsidiary to pay a total $125 million.

The Facebook spokesman did not elaborate further on the details of the agreement. France's tax administration also did not give more details.

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Advertising sales

Facebook's spokesman also said that since 2018 the company had decided to include its advertising sales in France in its annual accounts covering France.

As a result, Facebook's total net revenue almost doubled in 2019 from a year earlier to $881 million, a copy of Facebook France's 2019 annual accounts, filed with France's companies registry and seen by Reuters, showed.

Facebook France, which employs 208 people, refers to the French tax audit report in its 2019 annual accounts, saying it amounted to a tax adjustment of about $123 million. This includes a penalty of about 22 million, the annual accounts showed.

French magazine Capital was first to report the payment of back taxes.

Facebook's spokesman said that the company paid $10 million of income taxes in 2019 in France, an increase of almost 50% from a year earlier.

"We take our tax obligations seriously, pay the taxes we owe in all markets where we operate and work closely with tax authorities around the world to make sure we abide by all applicable tax laws and resolve any litigation," he said.

READ MORE: The battle to tax big tech is getting real 

Source: Reuters