Google emerged as the victor in its latest legal battle in Europe on Wednesday, after a French court said the technology behemoth did not have to pay $US1.3 billion ($1.7 billion) in back taxes.

At issue was whether Google avoided taxes in France by routing sales in the country through an Irish-based subsidiary over a five-year period ending in 2010. But an administrative court in Paris ruled that the Irish subsidiary was not taxable in France.

Google has been facing a steady stream of legal challenges across Europe, with many of the disputes focusing on the company's tax and competitive practices.

Last month, European regulators levied a record $US2.7 billion fine against Google for favouring its own products over those of its competitors on its powerful search engine.

European Union officials also brought charges against Android, its mobile operating system, saying that Google forced cellphone manufacturers to install its own services, like mobile search, on the phones.

Other US-based technology companies have also faced heightened scrutiny in Europe, including Apple.

In August, the EU ordered Apple to pay $US14.5 billion in taxes in Ireland, contending that Apple's deals with the Irish government allowed the technology giant to pay virtually nothing on its European business in some years. Apple has disputed that ruling and is appealing it.

While Google employs 700 people in France through its subsidiary there, the company used a subsidiary based in Ireland to sell French customers various digital services like its well-known advertising platform AdWords, according to court filings. The case hinged on whether Google owed various taxes in France, even though it sold services from Ireland.

French tax authorities argued that Google's French employees were instrumental in selling the ad space, even if the contracts were made with the Irish subsidiary.

But in its ruling on Wednesday, the court agreed with Google. It found that the Irish subsidiary did not have a "stable" presence in France, meaning that the French tax authorities could not collect corporate income and withholding taxes from it. The court also decided that other taxes, including the value-added tax, did not apply.

In a statement, Google said the ruling confirmed that the company "abides by French tax law and international standards". It added, "We remain committed to France and the growth of its digital economy."

Ireland, with its low corporate tax rates, has emerged as a popular location for multinational companies to route their sales through. Companies have used tax-planning techniques with names like the "Double Irish with a Dutch Sandwich" to lower their tax bills in Europe.

New York Times