Photograph: Virginia Mayo/AP

French investigators have raided Google s Paris headquarters, saying the company is now under investigation for aggravated financial fraud and organised money laundering.

Google maintains that its large offices in Paris, London and other European capitals are not fully fledged businesses, but operate as mere satellites of its international headquarters in Dublin, providing back-office services such as marketing.

The enquiry is focused on verifying whether the company Google Ireland Ltd controls a permanent establishment in France and if, by not declaring a part of the activities conducted on French territory, it has failed in its fiscal obligations, notably regarding taxes on companies and value-added tax.

In January, Google agreed to pay £130m in back-taxes to the UK Treasury, but the announcement triggered uproar from tax campaigners and opposition MPs, because it meant that HM Revenue and Customs had effectively allowed the firm to continue routing its UK sales through Ireland.

Used by multinationals to shelter profits generated in major markets, where tax rates tend to be higher, transfer pricing works by shunting money into lower tax jurisdictions.

Two years ago, Google notified the US stockmarket regulator that it was subject to a tax inquiry.

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