Google 'dives' taxes on 1.7bn euros

Tue 22 December 2009 09:03, Bas van den Beld

Google 'dives' taxes on 1.7bn euros

It's funny how Europe works. There are many different countries, all with their own jurisdiction. The European Union tries to level different jurisdictions by making universal laws. But they haven't looked at the tax issues. European regulations make it possible for pan-European companies to move money around so they can pay as little tax as possible.

These rules make it possible that Google, the biggest search engine worldwide and especcially in Europe, doesn't have to pay taxes on 1.7 billion euros earned with advertising in the UK. It's the same reason why the Turkish government opposed not long ago: Google pays their taxes in Ireland.

Google has more than 800 people working for them in the UK. It therefore feels it makes a “substantial contribution” to the taxes in the UK by paying related payroll taxes. It therefore has no intention to pay any other taxes in the UK. British politicians have urged Google to start paying, but the search giant is not planning to do anything like that.

Peter Barron, director of communications for Google in northern Europe, says:

“Google makes a big investment in the UK, with over 800 employees, and we make a substantial contribution to local and national taxation. But the fact is that our European headquarters is in Dublin. We comply fully with the tax laws in all the countries in which we operate.”

In the UK the press and politics have reacted on the news with a lot of anger towards Google. Labour MP for Great Grimsby Austin Mitchell even said:

“The search engine is a marvellous service, but the company is run by tax avoiders. If they are going to make so much money here they need to give more back to society.”

The anger however might be pointed towards the wrong party. Google works according to the European rules, rules made by the politicians. If they want Google to change their way, they should change the rules.


  • Comments (4)
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Comments (4)

 

  • So you're saying it's okay to be unethical just because you can? I think it's okay to be angry at people who are being unethical.

    Why blame faulty laws for faulty behaviour? Would it be okay to shoot people if there was no law prohibiting you from doing that?

    Di 22 dec 2009, 10:45


  • No, that's not what I'm saying. That's turning the things upside down.

    What I'm saying is that those who are 'accusing' Google are the ones who made the laws. They should first change the laws before they start complaining. Look at yourself before you point to others.

    It can be unethical and you can be angry about that, but it's too easy to point at others who make use of your mistakes without correcting your own mistakes.

    Di 22 dec 2009, 11:11


  • Well I see your point there, but it's not only the lawmakers that are getting upset over this. Actually it's not even the lawmakers who are getting hurt most by this.

    In the end in cases like this the consumer gets te bill. Google dodges their tax payments on income generated in the EU, but they do take ahrd cash out of those countries. Someone has to make up for that, and it won't be the government.

    You are correct in saying 'the government can hardly complain because they made the law in the first place', but the public sure can complain. And they should.

    Even for Google goes: want the benefits? pay the taxes.

    Di 22 dec 2009, 11:36


    • Barry Adams

    To be entirely accurate, Google does pay taxes, just not in the UK. They pay taxes in Ireland, which has a much lower corporate tax rate.

    Both Ireland and the UK are part of the European Union (regardless of how much the UK tabloids keeps denying it), so Google contributes to overall EU taxation.

    For as long as multinational companies have existed they've chosen the most favourable location to be based in and pay taxes in. This is nothing new, and Google is just doing what literally tens of thousands of companies active in the UK have been doing for decades.

    For the UK government to get riled up about this 'issue' is the height of hypocrisy and populism.

    Di 22 dec 2009, 13:01

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