Misunderstanding: Google escapes billions in Italian tax demands
After a clarified misunderstanding, Google has to pay 306 million euros in back taxes in Italy. Oh no, that was in 2017. This time it's 326 million.
Officials of the Guardia di Finanza (2009)
(Image: karlnorling CC BY 2.0)
Google escapes prosecution in Italy for tax evasion and a possible bill of one billion euros. The data company pays 326 million euros instead. The tax police close the case, the public prosecutor's office drops the charges against an Irish Google manager. This is strikingly reminiscent of events from 2017.
Back then, Italian authorities also accused Google of tax evasion. Between 2009 and 2013, Google allegedly underpaid around 300 million euros in taxes in Italy. Three managers of the European Google subsidiary, Google Ireland were charged in Italy at the time. Italian authorities and the US company entered into negotiations to avoid future misunderstandings about tax law on the one hand and Google's business structure in Italy on the other. In the end, Google Italy paid 303 million euros and Google Ireland three million. One of the three managers pleaded guilty and paid a fine, the other charges were dropped.
New misunderstandings amounting to 326 million euros
This settled the matter and everyone involved knew they would behave correctly from then on. Actually. In reality, Google has apparently once again failed to adequately fulfill its tax obligations in Italy. This time it concerns the years 2016 to 2020. Italian authorities have accused Google and an Irish manager of tax evasion. Including a surcharge for evasion, Google was ordered to pay around one billion euros, and an indictment was also issued.
Videos by heise
Unfortunately, all of this is based on new misunderstandings. At the heart of the matter is the question of what constitutes a permanent establishment. Google refers to its European subsidiary Google Ireland in Ireland; this is the relevant permanent establishment. Italy refers to Google Italy's offices in Milan and the extensive server structure that Google maintains in Italy. Google uses these to distribute software and videos to Italian customers, among other things.
Google was able to convince the Italian authorities that the Italian servers were controlled from Ireland by means of maintenance contracts. The employees in Milan had nothing to do with this, but were rather involved in sales to major customers. The result: it is not a case of tax evasion, but of circumvention of tax regulations to obtain unjustified advantages. This means that the surcharges for tax evasion do not apply and Google only has to pay 326 million euros in arrears, approximately 5.50 euros per Italian resident. The indictment is dropped. In addition, all ambiguities have now been removed. Garantito.
(ds)
