Google Reaches Tax Settlement in Italy -- Update
May 04 2017 - 10:29AM
Dow Jones News
By Giovanni Legorano
ROME-- Alphabet Inc.'s Google has agreed to pay around EUR306
million ($334 million) in back taxes in Italy to settle a dispute
that has dragged on a year and a half between the tech giant and
the Italian authorities.
The settlement is the outcome of one of several probes across
Europe into the tax practices of multinational corporations,
including several of America's biggest tech firms.
The agreement signed on Thursday between Google and the
authorities in Rome relates mainly to corporate taxes the Italians
accused Google of having failed to pay over the course of 2009 and
2015. The Italian authorities alleged Google routed more than EUR1
billion in Italy-based revenue to its office in Ireland, in
addition to an older tax dispute dating back to the period between
2002 and 2006.
Thursday's deal will pave the way for agreements that Google
pays taxes on future income generated in Italy, according to the
Italian tax authorities.
"Google and the Italian Revenue Agency have reached a
settlement, resolving a tax inquiry for a period between 2002 and
2015 without litigation," a Google spokesman said in an emailed
statement. "We remain committed to Italy," the spokesman said.
The spokesman said that of the EUR306 million in back taxes,
EUR303 million was attributed to Google Italy, with the rest to
Google Ireland.
This is the second settlement between a U.S. tech giant and the
Italian tax authorities. Apple Inc. agreed at the end of 2015 to
pay about EUR318 million to end a dispute in which the company
allegedly failed to pay almost EUR900 million in taxes between 2008
and 2013.
Italy's tax authorities have targeted Italian companies and
multinationals, in particular those using holding companies based
in lower-tax countries. The Italian efforts are part of the broader
European push aimed at recouping tax revenue that multinational
companies have allegedly avoided by using complex corporate
structures to book revenue in lower-tax jurisdictions, such as
Luxembourg and Ireland, that they have earned in high-tax countries
such as Italy.
The Italian tax police have investigated Amazon.com and Facebook
Inc. People familiar with the matter said the tax police told
Amazon the authorities believes it has evaded around EUR130 million
of taxes in Italy on sales done through the company's Italian
website worth around EUR2.5 billion between 2011 and 2015.
The person familiar with the matter said the tax police's
investigation into Facebook is continuing.
Amazon and Facebook didn't immediately reply to requests for
comment.
The tax controversies center on how much business Google and
other tech companies conduct in individual European countries.
Google argues that clients in countries such as Italy don't
actually close any advertising deals with employees in these
countries, but instead buy the spots from Google Ireland, the
company's headquarters for Europe, the Middle East and Africa.
In a similar fashion, Amazon argues the revenue that tax police
say it didn't book in Italy was generated in Luxembourg where it
was declared.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
(END) Dow Jones Newswires
May 04, 2017 10:14 ET (14:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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