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.

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