Google’s Span­ish tax af­fairs

Google is un­der in­ves­ti­ga­tion by tax au­thor­i­ties in Spain and France, af­ter hav­ing re­cently made deals with UK and Ital­ian au­thor­i­ties over back taxes, re­ports

Tech Advisor - - Contents - Pe­ter Sayer

Spain has joined the scrum of tax au­thor­i­ties ex­am­in­ing Google’s ac­counts to see if the com­pany has paid all that it should. A team of in­spec­tors from the Span­ish tax au­thor­ity, raided Google of­fices on two sites in Madrid re­cently. They were in­ves­ti­gat­ing the tax li­a­bil­i­ties of Google’s sub­sidiaries in Spain and Ire­land, through which the com­pany chan­nels much of its Euro­pean rev­enue.

It’s a rel­a­tively com­mon busi­ness prac­tice to lo­cate profit-gen­er­at­ing ac­tiv­i­ties in ju­ris­dic­tions with low rates of cor­po­ra­tion tax, and keep loss-mak­ing func­tions where taxes are higher. Di­rect­ing profit to low-tax ju­ris­dic­tions in this way is not nec­es­sar­ily il­le­gal, if the trans­fer can be jus­ti­fied.

The tax au­thor­i­ties are con­cerned that Google’s Span­ish staff may be play­ing a greater role in the gen­er­a­tion of rev­enue and profit than the com­pany has de­clared.

Other coun­tries too have been in­ves­ti­gat­ing Google’s tax af­fairs. French au­thor­i­ties con­ducted a dawn raid on the com­pany’s Paris of­fice in May as part of an in­ves­ti­ga­tion into whether Google should pay $1.8 bil­lion in back taxes.

And in Jan­uary Italy asked the com­pany to pay € 228 mil­lion (then $257 mil­lion) in back taxes for the pe­riod 2009 to 2013. That re­quest came as UK au­thor­i­ties con­cluded an in­ves­ti­ga­tion into the com­pany’s tax pay­ments over a 10-year pe­riod, re­sult­ing in a de­mand for £130 mil­lion (then $186 mil­lion) in back taxes.

With so many Euro­pean Union tax au­thor­i­ties in­ves­ti­gat­ing the com­pany, EU Com­pe­ti­tion Com­mis­sioner Mar­grethe Vestager said she would join in if she re­ceived an of­fi­cial com­plaint.

Google has is­sued a state­ment de­fend­ing its tax prac­tices. “We com­ply with the tax law in Spain, as in ev­ery other coun­try in which we op­er­ate. We are co­op­er­at­ing fully with the au­thor­i­ties in Madrid to an­swer their ques­tions, as al­ways,” ac­cord­ing to an email from a Google spokesman.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.