Google and the Italian Revenue Agency are expected to sign a €300 million settlement today to resolve a dispute over the Internet company’s unpaid taxes between 2009 and 2013. After more than a year of negotiations and repeated announcements (that were swiftly denied), a “verification with acceptance” is due to be agreed today which will seal the peace between the firm and the Italian state.
In the end, the price to pay is not extreme for a multinational that registered global turnover of $24.7 billion and profits of $5.4 billion in the first quarter of the year.
The agreement – thanks to investigations by Milan’s financial police — should conclude with the recognition of Google’s permanent establishment in Italy, a condition that will allow the tax authority to regularly collect taxes due in the next years.
And this is not a small step.
A previous fiscal agreement on December 30, 2015, which closed the dispute between the tax authority and Apple with a €318 million settlement, was followed by controversy over the size, considered by some as limited, of the figure that the multinational had accepted to pay in light of evasion estimated at €897 million between 2008 and 2014.
Whether that figure was big or small, the agreement made it possible to bring Apple’s situation in Italy in line with the law (also starting talks for the definition of a tax ruling for the subsequent years). It above all represented a precedent, strongly pushed for by the head of Milan’s Prosecutor’s Office, Francesco Greco, who had launched a criminal investigation into three Apple managers.
The Apple deal was a trailblazer in Italy and in the European Union. A year and a half later, now comes the deal with Google. Also this time a criminal investigation by Milan prosecutors is in the background. Five company executives are under investigation, accused of fraudulent declarations. Following the script of the “Apple case,” the negotiations lasted for more than a year, moving repeatedly between the Italian Revenue Agency, the offices of the Milan prosecutors, and lawyers for Google.
This is a complex triangulation because the international fiscal regulation of the web company is an extremely difficult (and new) subject.
The corporate structure that Google has set up between Ireland, the Netherlands and Bermuda, known as “Double Irish with a Dutch sandwich,” takes advantage of tax arbitrage between the different countries, ends in a fiscal paradise that does not foresee the payment of taxes on companies and moves on a route which is difficult for fiscal authorities in European countries to go after.
Therefore, an agreement that resolves the past and brings the companies in line for the future could seem unfair (and in general it is) for those who are forced to pay taxes down to the last cent, but it is maybe the only route that can be realistically pursued.
Last year in Britain, David Cameron‘s government accepted £130 million from the Mountain View search engine to close its fiscal dispute with Britain. Also in that case controversy swirled because according to some estimates in the last 10 years Google appropriated £7.2 billion in profits altogether. Now, after the closure of the Italian front, the web multinational still has disputes open with France and Spain.
by Angelo Mincuzzi, ItalyEurope 24