Sunday 22 October 2017

Google pays just €8m tax here by routing €9bn profits abroad

John Mulligan

John Mulligan

IT handles billions of searches every day, but internet giant Google is still keeping its Irish tax bill in the low millions thanks to a sun-kissed island that's a honeymoon favourite.

Google, which has its European base in Dublin, said yesterday that its Irish operation generated a whopping €12.5bn in revenue last year and gross profit of €9bn. Despite this, Google only paid just over €8m to the Revenue Commissioners here.

Google keeps a lid on its Irish tax bill by routing much of the profit from its Irish subsidiary via Holland to Bermuda.

The process is reckoned to have saved the internet search goliath billions of dollars and euros in taxes over the past number of years.

Other multinationals based in countries around the world use similar schemes to pare their tax exposure to the bone.

The Google scheme is completely legal thanks to international taxation agreements, but it's the kind of efficient financial engineering that gets right up the nose of politicians such as US President Barack Obama.

The accounts for Google Ireland released yesterday also reveal that while the company generated a gross profit of just over €9bn in 2011, it racked up administrative expenses totalling almost the same amount.

That meant it made a pre-tax profit of just €24.3m which left the company with a €8m Irish corporation tax bill.

Google Ireland -- which employs 2,500 people here -- said the rise in administrative expenses was due to the higher headcount necessary to support the growth of the business, higher marketing costs and more royalties.

Those royalties -- considered an expense and so not taxable for Google Ireland -- are siphoned off to another Google company based in Ireland, whose management team are ostensibly based in Bermuda.

In a book published this year called 'Are You Smart Enough to Work at Google', author William Poundstone outlined some fiendish interviews and puzzles prospective Google techies are faced with.

It would appear that the company's tax executives have to be just as clever as Google's engineers.

The latest set of accounts for the Irish arm also confirm that it paid €227m to buy the three buildings that comprise its headquarters on Dublin's Barrow Street.

The head of Google's operations in Ireland, John Herlihy, said 2011 was a period of "sustained growth" for the business.

"We continue to reap the rewards of the growth in the digital economy," he said.

Irish Independent

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