Google is to pay £183m in back taxes to the Irish government, in line with its promise to halt the use of the European tax loophole
Alphabet’s Google unit in Ireland has agreed to make a backdated settlement payment to the Irish government, on top of its corporation tax payment for 2020.
The Guardian newspaper reported that Google’s Irish subsidiary will pay 218m euros (£183m) in back taxes to the Irish government, according to company filings.
It comes after world leaders in October reached an historic agreement of 15 percent corporation tax rate, potentially ending years of global corporations utilising low-taxing countries such as Ireland or Luxembourg, to limit their corporate tax obligations.
The agreement to a global minimum corporate tax rate of 15 percent, was a major shift for smaller economies, such as Ireland, which have previously attracted international firms thanks to its lower tax rate.
The issue of mostly American big name corporations using certain low tax European nations such as Ireland or Luxembourg to base their operations, has long been a bug bear for governments around the world.
In 2019 for example, Amazon was accused of paying less tax in the UK over a 20 year period, than some major UK retailers pay in a single year.
Now the Guardian has reported that Google Ireland will pay corporation tax of €622m for 2020, including the €218m backdated settlement and interest charges. The previous year Google Ireland paid taxes of €263m.
Google reportedly promised in January 2020 that it would ditch the loopholes strategy, which allowed it to effectively shuffle revenues made across Europe offshore to places like Bermuda, where the tax rate was zero.
In the filing Google said only: “Subsequent to year-end, the company agreed to the resolution of certain tax matters relating to prior years. This tax liability and associated interest are recognised in the current financial year.”
Apple back taxes
Google rival Apple is still involved in a large back tax legal battle.
In 2016, the European Commission ordered a reluctant Irish government to recover up to 13 billion euros (£11.8bn) plus interest in “illegal tax benefits” from Apple.
In July 2020 Europe’s second-top court rejected an EU order that Apple had to pay 13 billion euros ($11.8bn) in Irish back taxes.
However the European Commission is currently challenging that ruling.