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Google agrees €306m Italian tax settlement

Google agrees €306m Italian tax settlement

By: in Rome and in London

Tech giant settles after probe but remains in dispute with other countries

Google has drawn a line under one of its most significant tax disputes in Europe, after agreeing to pay €306m to the Italian authorities at the end of a long-running case. 

The dispute was one of several sparked by the contrast between the billions of dollars in sales the US technology company makes from European consumers and its tax payments to the countries where they live.

Google has already settled with the UK, paying £130m in back taxes in 2016 to end a decade-long probe. But it remains in dispute elsewhere in Europe. The French tax authority raided Google’s offices in May last year. Its offices in Spain were raided a month later. 

Agenzia delle Entrate, Italy’s tax agency, said the bulk of the money that Google agreed to pay in Thursday’s settlement was the result of a probe by the tax police and prosecutors in Milan into its tax position between 2009 and 2013. It also included small amounts relating to 2014 and 2015, as well as an older dispute dating back to the years between 2002 and 2006. In 2014, Google paid €2.2m in Italian taxes, according to company filings. 

“[We] confirm our commitment to pursue careful fiscal checks on the Italian operations of web multinationals,” the tax agency said, adding that talks would begin with Google on “preventive accords” for the “correct taxation” of its Italian business in the future.

Google said in a brief statement that it confirmed “its commitment to Italy and will continue to work to contribute to the growth of the online ecosystem in the country”. It added that €303m of the money paid in the settlement related to Google Italy and the remaining €3m was attributable to Google Ireland, its European base, where corporate tax rates are lower.

The deal with Google follows an accord reached in December 2015, where Apple agreed to pay €300m in its own settlement with the Italian tax authorities.

While internet companies have been particularly affected by the backlash against aggressive tax avoidance, other types of businesses are also coming under pressure. A report published this week by professional services firm EY found that tougher enforcement of tax rules and new transfer pricing rules — determining the allocation of taxable profits between countries — were the main reasons that companies’ tax bills were increasing. 

For Italy, the settlements are not only important as a tax enforcement matter, but could also help in budgetary terms, as it tries to reduce its deficit. Some Italian politicians have also proposed introducing a special “web tax” that could hit internet giants like Google that operate in the country.

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