"We have put an end to the tax and related disputes we had had in France for many years," Google said in a statement, Efe news reported on Thursday.
"These agreements include a payment of 500 million euros announced on Thursday by a French court, as well as an amount of 465 million euros in additional taxes that we have agreed to pay," the tech giant added.
The payment of the fine will put an end to a four-year probe.
The French Treasury accused the tech giant, which has headquarters in Ireland, of fiscal engineering to avoid paying taxes in France.
The French Financial Prosecutor's Office launched an investigation into Google's accounts in June 2015 after the Treasury alleged the company had not paid corporate income tax over four years.
Google has used a legal loophole in the past to avoid paying hefty tax fees in European countries by having staff in Dublin close all sales contracts.
The Paris Court of Appeal added in a statement that the agreed convention allows closing the criminal proceeding against Google that could result from a tax inspection.
In statements to the website of the newspaper "Le Figaro", the French Finance Minister, Gérald Darmanin, said that the figure was "a record" and that it resembled what the government had claimed back from Google.
"It is a historic settlement both for our public finances and because it marks the end of an era," Darmanin said.
Darmanin said that the same firmness shown with the internet giant can be applied to other companies and revealed that they are in negotiations with some of them, "large and small, digital or not."
"What is clear is that the dispute we have just closed will undoubtedly establish jurisprudence and clarify the whole world for the future," he said.
In a statement, he considered the agreement "historic" because "it marks the end of an era."
Justice Minister Nicole Belloubet said that the resolution of this case would not have been possible without the adoption of new rules in the fight against fraud.
( With inputs from IANS )