According to the latest reports, on Thursday, local time, the latest financial statement submitted by the US technology giant Google showed that the company has reached a tax settlement agreement with the Irish tax authority and agreed to pay 218 million euros (approximately $245 million) tax.
Google Ireland’s documents show that the company will also pay 622 million euros (approximately US$697 million) of corporate tax to the Irish Tax Office in 2020, including 218 million euros in back taxes and 127.2 million euros (approximately 143 million US dollars), bringing the total settlement amount to 345.2 million euros (approximately 390 million US dollars). Previously, Google Ireland only paid 263 million euros (approximately US$295 million) in 2020.
These documents also show that Google Ireland’s 2020 revenue was 48.4 billion euros (approximately 54.2 billion U.S. dollars), an increase of 2.7 billion euros (approximately 3 billion U.S. dollars) from 45.7 billion euros (approximately 51.2 billion U.S. dollars) in the same period last year). The company’s total pre-tax profit was 2.85 billion euros (approximately 3.2 billion U.S. dollars), compared with 1.94 billion euros (approximately 2.17 billion U.S. dollars) in 2019. The company will pay a total of 622 million euros in taxes and fees in 2020, of which 2.23 billion euros (approximately 2.5 billion US dollars) are included in the capital.
Google has been accused of evading hundreds of millions of dollars in taxes in Europe through the so-called “double Irish, Dutch sandwich” loophole. The company confirmed the tax settlement in the financial statements: “After the end of the year, the company agreed to resolve certain tax issues related to previous years. This tax and related interest are recognized in the current fiscal year.”
Google did not explain the reasons for the tax owed in its accounts, nor did the documents provide details of the settlement. The company declined to comment on the matter. According to a 2015 law, Google promised last year that it would abandon the loophole strategy, a strategy that enables it to effectively transfer income derived from outside Europe to places with zero tax rates, such as Bermuda. A Bloomberg survey showed that the plan allows Google to reduce its overseas tax rate to 2.4%.
Paul Monaghan, CEO of the Fair Tax Foundation, said: “Alphabet’s tax practices are indeed lacking in transparency, which is shameful, especially at the level of the Irish subsidiary. Stakeholders have the Right to Know what is involved in Google’s Irish corporate tax solution.
Monaghan also stated: “Given that Alphabet’s filings in the United States show that it has billions of dollars in tax disputes with tax authorities around the world, and according to Alphabet’s own definition, it’s less likely to win in these situations. 50%, investors, in particular, should be worried.”
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Google Ireland’s staff costs in 2020 totaled 754 million euros (approximately US$845 million), higher than the 617.9 million euros (approximately US$692 million) in the same period last year. This includes wages and salaries, which jumped to 520.9 million euros (approximately US$584 million) in 2019, compared with 427.7 million euros (approximately US$480 million) in 2019. The number of people directly employed by Google Ireland rose from 3,949 in the previous year to 4,314, with an average salary of more than 120,000 Euros (approximately US$130,000).
The company’s administrative expenses increased from 29.7 billion euros (approximately 32.3 billion U.S. dollars) to 33.6 billion euros (approximately 37.7 billion U.S. dollars), mainly due to the increase in the number of employees and additional royalties. The cost of sales, including traffic acquisition fees, fell from 14.3 billion euros (approximately $16 billion) to 12 billion euros (approximately $13.4 billion).
A Google Ireland spokesperson said: “2020 is another strong year for Google Ireland. Over the past 18 years, we have played a key role in the success of Google’s Europe, Middle East and Africa business. We continue to invest and support Our Irish business.”
Ireland has become the European business base of several large multinational companies, including Google, Apple and Meta’s Facebook, partly because of the low corporate tax rate here, and the G7 is planning to reform this. In the financial statements, Google also stated that it is “focusing on the progress of global corporate tax reform”, which may prompt the increase in corporate tax rates in the next few years.