Google’s Irish subsidiary has agreed to pay €218m (£183m) in back taxes to the Irish government, according to company filings.
The US tech company, which had been accused of avoiding hundreds of millions in tax across Europe through loopholes known as the “double Irish, Dutch sandwich”, said it had “agreed to the resolution of certain tax matters relating to prior years”.
Google Ireland said it would pay corporation tax of €622m for 2020, including the €218m backdated settlement and interest charges. The previous year Google Ireland paid taxes of €263m.
In line with a 2015 law, the company, which is part of the parent company Alphabet, promised last year 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. A Bloomberg investigation showed the scheme allowed Google to cut its overseas tax rate to just 2.4%.
Google did not explain the reason for the back tax payment in its accounts and did not respond to request for comment. In the filing it 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.”
Paul Monaghan, the chief executive of the Fair Tax Foundation, said: “There really is a disgraceful lack of transparency around Alphabet’s tax conduct, especially at the level of the Irish subsidiaries. Stakeholders have a right to know what this Irish corporation tax settlement relates to.
“Investors in particular should be concerned given Alphabet’s US filings show that it has billions more in dispute with tax authorities around the globe in circumstances where, by its own definition, it has less than 50% chance of winning.”
Ireland, which has provided low-tax European headquarters for many of the world’s largest multinationals, initially declined to sign up to an Organisation for Economic Co-operation and Development agreement for a global minimum corporate tax rate of 15% by 2023, but dropped its resistance to the plan after a change to the text.
The agreement, which has been joined by most of 140 countries taking part in negotiations, is designed to end decades of countries undercutting their neighbours by offering companies lower taxes.
The accounts show Google Ireland Limited made a pre-tax profit of €2.85bn in 2020, up from €1.94bn in 2019. Turnover rose by €2.7bn to €48.4bn.
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Google to pay £183m in back taxes to Irish government