Google Settles Back Tax Case By Paying Italy $334 Million

Google has been in hot water with Italy over back taxes for a while now, and the case seems to finally be meeting its end, with Google agreeing to pay $334 million to settle their account with the country's tax authority. This is in addition to the taxes that Google has already paid to Italy in recent years, so the company will not see a refund off of this settlement or owe any additional money aside from its currently accruing taxes. The deal brings Google's tax books in Italy up to date from 2002 all the way up through 2015, years during which Google underpaid its taxes, according to Italian authorities.

Not too long ago, Google made a similar deal with the United Kingdom. While that settlement was widely panned by those who said that it wasn't aggressive enough, Italy sought a similar deal under terms more agreeable to their particular case. To date, Google still has tax issues with offices in Indonesia, Australia, and several other countries. The Alphabet-owned company did not have any delinquent tax years that had been left unpaid; instead, this back tax file comes from Google's alleged use of tax havens, recent reports indicate.

Google's main tax haven was in Ireland and the Mountain View-based tech giant allegedly declared a large portion of its income in Europe as originating from its operations there, where tax rates were far lower than in most other countries on the Old Continent. For operations in some European countries, this discrepancy amounted to most of Google's operating income. Any sales, ad revenue, and other income originating from a given country now have to be reported in that same country in Google's case. Previously, the company could route much of its income reporting to Ireland, but that tactic will soon be impossible to use again due to regulatory changes in Europe, meaning Google will have to adjust its operations accordingly. It's currently unclear whether the company will pay the back taxes it owes to Italy in installments or if Google agreed to a one-time fee, but more details on the matter will likely follow later this year.

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