General Electric’s French Tax Scam

Since the purchase of Alstom Energy in 2015, the US multinational could have put in place a vast system of tax evasion involving France, Switzerland and Delaware. With the blessing of the French Finance Ministry.

It is an industrial fiasco which has no end. Seven years after the sale of Alstom Energy to General Electric, (([Translator’s note] The complex saga of the corrupt takeover of Alstom Energy by General Electric is told in Jones, ‘Behind GE’s Takeover of Alstom Energy, Counterpunch, 2 December 2016; and Jones, ‘The Coalition of the US Justice Department and GE against Alstom’, Dissident Voice, 20 April 2019. Of great significance regarding the rise and rise of General Electric is a recent book by Stephen Maher, Corporate Capitalism and the Integral State: General Electric and a Century of American Power, Palgrave Macmillan, 2022.)) the record of the American multinational has been disastrous – 5000 workers retrenched, including 1400 in the key Belfort factory complex; an advanced technology hub left to rot; a preliminary inquest for conflict of interest against Hugh Bailey, CEO of GE France. (([Translator’s note] In September 2019, the public prosecutor of Paris charged Bailey for possible conflict of interest. Bailey was advisor in the office of Emmanuel Macron, then Economy Minister, when €70 million was granted to the French export authority which directly benefited GE’s exports. In 2017, Macron becomes President, Bailey is hired by GE France and is appointed CEO in 2019.)) And now, a scandal involving tax evasion.

According to our inquest, supported by independent audit reports and several internal accounting documents of the group, the American multinational has put in place an opaque financial setup between its French subsidiary, General Electric Energy Products France (GEEPF) and subsidiaries domiciled in Switzerland and in the American State of Delaware.

Objective: to bypass the French tax authorities in concealing the profits arising from the sale of gas turbines produced at Belfort, in the Bourgogne-Franche-Comté.region. We estimate that more than €800 million has disappeared from GEEPF’s accounts between 2015 and 2020. This translates into a deficit for the public exchequer of €150-300 million.

Mediapart has already analysed in 2019 the means by which the financial policies of the company has drained the Belfort site. The massive utilisation of intra-group financial transfers via transfer pricing has been outlined. The revelations of Disclose confirm and deepen this information.

For GE, the large-scale tax evasion begins in late 2015 by a trick both simple and discrete: the transfer of corporate liability to a company created for the occasion at Baden, in Switzerland. Its name: General Electric Switzerland GmbH (GES).

From then onwards, the Belfort factory, announced at the time of purchase from Alstom as the future global site of turbine production for the group, ceases to be a manufacturing site and becomes a ‘production unit’ placed under the direction of a Swiss company. This restructuring marks the last profitable year of the Belfort site. And for good reason: with this sleight of hand, GE comes to launch its process of the appropriation of the profits arising from the sale of turbines and component parts ‘made in France’.

An illustration from 2019. This particular year, a contract is passed between GEEPF and the Swiss company GES for the sale of gas turbines. The contract price – more than €350 million. Although these products have been produced in France, GES appropriates for itself the status of ‘manufacturer’, presenting the Belfort site merely as a banal ‘distributor’.

The point of this vanishing act: to allow the Swiss outlet to resell the turbines to the ultimate client in order to garner the profits of the sale. In the framework of the contracts, not less than 97 % of the profits fly off to Switzerland, where the company tax rate ranges between 17 – 22 % against 33 % in France. Contacted, General Electric has not responded to our questions.

Laissez-faire of the state

A similar setup concerns the sale of replacement parts for the turbines – the bulk of revenues generated at Belfort. From estimates based on the GE group’s annual reports, the scheme could have transferred around €1.5 billion to GES, the Swiss subsidiary, between 2016 and 2019. All with the blessing of the French Finance Ministry.

From our investigations, General Electric, following the acquisition of Alstom Energy, could have benefited from the protocol of a ‘trust relationship’ (relation de confiance) with the French Treasury. This mechanism allows that “the enterprise should furnish all the elements necessary to the understanding of its [fiscal] situation”, citing a document from the DGFiP (direction générale des finances publiques), dating from 2013. Clearly, the multinational has validated its tax scheme, involving the links with its subsidiaries, with the Finance Ministry. In return, it has ensured that the Ministry has arranged to not execute any control over the arrangement. Interrogated over its precise knowledge of this mechanism of fiscal optimisation established by General Electric, the Ministry of Economy and Finance has not responded to our questions.

At Baden, 8 Brown-Boveri Strasse, General Electric has domiciled three other subsidiaries as French ‘service providers’. The first two, General Electric Global Services GMbH and GE Global Parts and Products GmbH, are charged to sell replacement parts manufactured at Belfort. The third, baptised General Electric Technology GmbH, has as mission to hold the patent rights over gas turbines. For one simple reason, according to one of the audit reports consulted by Disclose: “The foreign revenues arising from patents are very little taxed in Switzerland”. Since 2017, €177 million of royalty payments have left France, direction Baden.

The millions sent to Delaware

To complete its strategy of fiscal optimisation, General Electric relies on another subsidiary of the group, based, this time, in the US. Monogram Licensing International LLC – this is its name – is domiciled in Delaware, a State known for imposing zero tax on companies. Between 2014 and 2019, it could have received around €80.9 million on the part of GE France for the utilisation of GE’s brand, logo and advertising slogans. According to the contract in place between GE France and Monogram, France must pay 1 % of its annual turnover to Delaware. However, this threshold has been cleared on several occasions. With no explanation, one of the audits of the group has underlined.

The massive appropriation of the wealth produced by the workers of Belfort is essentially illegal, as outlined in the international tax convention BEPS (Base Erosion and Profit Shifting). Taking effect in France in 2019, this text, intended to reinforce the struggle against tax evasion, stipulates that company profits must be “taxed where the real economic activity takes place … and where value is created”. Logically, in the case of turbines manufactured at Belfort, the associated tax must then be deducted in France, not in Switzerland.

The workforce the losers

In making disappear €800 million from the accounts of General Electric Energy Products France, the multinational has then escaped tax. But it has also deprived the French workforce of a part of their participation in the enterprise. A tax expert to whom we’ve submitted the details of the operations of General Electric at Belfort confirms it: in artificially reducing the profits, the industrial could have deprived its employees of several thousand euros each, between 2015 and 2019, by virtue of their formal participation in GEEPF profits. In December 2021, the SUD Industrie Union and the Social and Economic Committee (CSE) on the Belfort site have lodged a complaint against their employer for “fraud against the right to participation [in profits] of employees”.

The system implanted by the group has equally burdened the municipal budget. “Leaving from the moment when GE moved its profits offshore, inevitably it pays less [local] taxes”, explains Mathilde Regnaud, opposition Councillor at Belfort. By February 2022, given “the cumulative loss of tax takings”, estimated at €10 million, from the tax on enterprise value-added (cotisation sur la valeur ajoutée des entreprises, CVAE), members of the Municipal Council of Belfort have requested a detailed analysis of the tax losses suffered by the town. A demand which points above all to “the legality … of the manoeuvres of fiscal optimisation” carried out by General Electric on the territory. In 2021, the aforesaid manoeuvres could have in part provoked the augmentation of property taxes on the commune.


31 May. Following publication, the Ministry of the Economy and Finance and the DGFiP (direction générale des finances publiques) have reacted through Agence France-Presse, claiming that they had never validated GE’s tax arrangements via any ‘trust relationship’. General Electric, through AFP, claims that the group “respects the fiscal regime of the countries in which it operates”.

  • The article has been translated by Evan Jones.
  • Filippo Ortona is an Italian freelance journalist who has contributed this article (29 May) to Disclose, a French network of investigative journalism. Read other articles by Filippo.