Google to pay £259m to settle Italian tax claims

The Italian tax authority has reached an agreement with Google which will see the tech giant pay €306m (£259m) in a deal to settle a number of tax disputes, including claims relating to some €1bn of revenues made in Italy but booked in Ireland between 2009 and 2013

The settlement also spells the end of a criminal investigation into Google’s tax activities coordinated by the chief public prosecutor in Milan, as well as covering separate disputes covering the periods of 2002-2006 and 2014-2015.

The latest payment is in addition to taxes Google has already paid in Italy over the period.

Google said in a statement: ‘Google and the Italian Revenue Agency have reached a settlement, resolving a tax inquiry for a period between 2002 and 2015 without litigation.

‘In addition to the corporation tax already paid in Italy for these years, Google will pay an additional €306m.

‘Of this, over €303m has been attributed to Google Italy and less than €3m attributed to Google Ireland. We remain committed to Italy and will continue to help grow the online ecosystem.’

In a statement the Italian tax agency said: ‘We have also begun the process of drawing up an agreement that will ensure Google pays the correct taxes in Italy in the future.

‘The agency confirms its commitment to pursue fiscal controls on the activities of web-based multinationals in Italy.’

Italy’s tax office agreed a similar deal with Apple in 2015, which saw Apple pay €318m for taxes due between 2008 and 2013.

The Italian authority is reportedly considering starting proceedings against Amazon, which it estimates could owe €130m for routeing its earnings through Luxembourg.

Last year Google also agreed to pay the Treasury £130m for around ten years of underpaid taxes in the UK, in a deal announced by the then-Chancellor George Osborne which was widely criticised as being too lenient.

Miles Dean, founding partner of Milestone International Tax Consultants, said: ‘Commentators in the UK will no doubt look at what has happened in Italy and conclude that HMRC is either turning a blind eye to what Google are doing in the UK, are treating Google favourably as against domestic business, or are simply incompetent.

‘However, tax turns on facts and it might simply be that Google Italy didn’t follow the tax advice to letter, whereas Google UK has.

‘The Italian Supreme Court has previously held that a permanent establishment can arise if an Italian entity is delegated to manage certain aspects of a foreign companies’ business, and contract negotiations can be assimilated to the authority to conclude contracts.

‘This latter point applies the Italian tax code in a way in which the UK’s diverted profits tax (unfortunately named the Google Tax) doesn’t.’

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