Google's Ireland Tax Arrangement Said to Draw More EU Scrutiny

Google's Ireland Tax Arrangement Said to Draw More EU Scrutiny

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The EU has taken a closer look at how Google uses operations in Ireland to help reduce its corporate tax obligations within the trade bloc, according to Bloomberg, citing people familiar with the matter. Officials from the European Commission held in-depth talks with Irish authorities late last year about whether the Internet-search unit of Alphabet complies with rules limiting tax perks provided by individual European governments, according to one person, who asked not to be named.

The review was preliminary and might not lead to any formal investigation, the person said. According to another person, an EU investigation isn’t imminent and some Irish authorities are optimistic that initial conversations proved sufficient to avoid a more extensive probe of the company’s tax arrangements. Irish Finance Minister Paschal Donohoe discussed a potential tax case with EU Competition Commissioner Margrethe Vestager, one person said. Google declined to comment, as did the European Commission.

EU officials have been cracking down in recent years on efforts by big global companies to limit their European tax burdens. Vestager, who is now seeking a top EU job, ordered Apple to pay back billions of euros to Ireland, and she backed a push by France to tax Internet firms more heavily. Apple, Google and Facebook all base their European operations in Ireland, which has a low basic corporate tax rate. Ireland has successfully resisted efforts by other European states to align tax calculations across the region. Vestager’s probes have provided another way for the EU to put pressure on low-tax states, including Ireland, Luxembourg and the Netherlands, that may lure firms away from other European nations.

Until recently, Google has seen little scrutiny of whether its Irish operations violate the EU’s so-called state-aid arrangements. Apple has been the biggest target so far. The company was ordered to pay as much as 13 billion euros for deals with Ireland that reduced its effective corporate tax rate. Apple and Ireland are appealing the decision. The EU has also taken aim at Amazon’s tax deals with Luxembourg.

Google arrived in Ireland in 2003, with 100 employees, and now, it employs about 7,000 in Ireland. The company’s European headquarters is in Dublin, the Irish capital, and its sprawling campus close to the city’s south docks has been dubbed Googletown. In 2017, Google Ireland recorded a profit of 1.2 billion euros on revenue of 32.2 billion euros, according to company filings. The firm paid 167 million euros in corporation tax.

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