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Google Agrees to Pay Italy $334 Million in Back Taxes

posted onMay 11, 2017
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When it comes to the huge profits of American technology giants, Europe wants a slice of the cake.

Google on Thursday became the latest company to agree to pay back taxes, in this case 306 million euros, or $334 million, to the Italian authorities for its operations in the country from 2002 to 2015.

Under a similar agreement in late 2015, Apple agreed to pay Italy €314 million in back taxes.

But Apple and the Irish government are appealing a separate €13 billion tax charge levied by the European Commission, the executive arm of the European Union, which said the company owed more tax on its businesses in Ireland.

As European lawmakers grapple with how much tax technology companies should pay on their overseas operations, industry executives are considering repatriating hundreds of billions of dollars under the Trump administration’s proposed “tax holiday,” which would shrink the current levy of 35 percent, before deductions, on such income.

American multinationals now hold an estimated $2.6 trillion overseas, most of it from tech companies’ global operations, and a reduction in the tax rate could inspire them to return a sizable amount of cash to the United States.

While changes to the tax system are at an early stage in Washington, some European policy makers worry that funds returned to the United States would allow American companies to avoid paying their fair share of tax in Europe, an accusation that tech industry officials reject.

Despite this potential sour point between the United States and Europe, politicians worldwide have joined forces to revamp the global tax system as a way to make multinational companies pay more tax on their foreign operations and restrict the transfer of profit to low-tax havens like Ireland and Bermuda.

On Thursday, Google confirmed that it would pay the back taxes to Italy, on top of what it already paid during 13 years of operations through 2015.

Last year, the search giant handed over 130 million pounds, or $168 million, in a similar settlement with the British tax authorities, although critics said the clawback should have been bigger.

Attention is now likely to turn to an investigation by the French tax authorities that could lead to a bill this year of more than $1 billion for Google. The company says that it has paid its fair share in France, but that it is cooperating with the inquiry.