Google's offices in Paris have been raided by police in an investigation into money laundering and "aggravated tax fraud".
The dawn raid, which involved around 100 investigators, is part of a probe into whether the internet giant has evaded corporation tax in France by diverting profits to its European base in Ireland.
French authorities believe that Google owes some €1.6 billion (NZ$2.6 billion) in corporation tax and VAT. The raid comes months after the company agreed to pay £130 million (NZ$215 million) in back taxes to the UK Government and amid growing scrutiny of the tax affairs of Silicon Valley's multinationals.
Google, like many major tech groups, bases its European operations in Ireland, where corporation taxes are lower than much of Europe, and registers sales from many other countries there.
But the company is now facing increasing scrutiny amid growing anger at multinationals' tax affairs. French authorities are now trying to establish whether sales registered in Ireland were in fact conducted in France.
"These searches are the result of a preliminary investigation opened on June 16, 2015 relative to aggravated tax fraud and organised money laundering following a complaint from French fiscal authorities," the French prosecutor's office said.
"The investigation is aimed at finding out whether Google Ireland Ltd. is permanently established in France and if, by not declaring some of its activity on French soil, it has failed to meet its fiscal obligations, in particular with regard to corporation tax and value added tax."
A Google spokesman said: ""We comply with the tax law in France, as in every other country in which we operate. We are cooperating fully with the authorities in Paris to answer their questions, as always."
The raid is the latest setback to Google in Europe. It has been ordered by the French data regulator to apply European right to be forgotten rules that censor search results, and is under investigation from the European Commission for abusing monopoly power both in search and its Android mobile software.
In January, after years of pressure, Google agreed to pay six years of UK back taxes to the Treasury and said it would book sales from domestic advertisers in the UK. The agreement with the Treasury was criticised by Labour for allegedly understating the true amount it should owe.