Google has won a significant legal challenge against efforts by the French government to recover €1.1bn (£970m) in back taxes.
At issue was the tech firm’s use of its Irish subsidiary to book revenues it gained in France between 2005 and 2010.
It was accused by the authorities of using an illegal loophole to escape higher corporate taxes but the French court ruled Google Ireland Limited was not taxable in the country.
It represents a blow to the French authorities who had vowed to secure a big sum from Google by applying the law after the UK negotiated a deal.
It was announced in January last year that the company would pay £130m in back-taxes to HM Revenue & Customs at an effective tax rate of 3%.
That deal – heavily criticised by Labour and other political opponents as too low – was hailed a “major success” by-then Chancellor George Osborne, who argued the multi-national firm was among many paying nothing when he took office.
Italy got more – £272m – when it held similar negotiations with Google this year.
The Paris court ruling was seen as damaging the ambition of new French President Emmanuel Macron to hold major international firms to account for any cheating.
It was also potentially damaging to a separate tax fraud investigation in France against Google, which – like rivals – has faced regulatory scrutiny over activities in the wider EU.
Just last month, the European Commission ordered it to pay a record fine of £2.1bn for abusing its dominance as a search engine to boost its shopping comparison service.
Google responded by saying it “respectfully disagreed” with the ruling and would consider an appeal.
Last year, European competition chief Margrethe Vestager ordered Apple to repay £11bn in back taxes in Ireland – a verdict that prompted both the company and country to appeal.