European Union considers investigation into Google’s £130 million tax deal

Google, which has its European headquarters in Ireland, insists it pays the proper amount of tax. Accountants and tax experts have been scratching their heads trying to understand how Google’s economic activity in Britain, based mainly around advertising, was calculated.

“We are already starting to see the diverted profits tax having that effect and we will see multinationals paying more corporation tax as a result”. I’m not sure if any tax has been paid in those countries.

Google executives and British tax officials will be called before MPs for questioning within weeks after a controversial tax settlement allowed the internet giant to pay just 3 percent on its multi-billion-pound profits. But this is more than a public-relations problem for Google and the government; it also sets a bad precedent.

The EU’s competition commissioner, Margrethe Vestager, has said she would be prepared to look at Google’s tax settlement with Britain, should she receive a formal complaint. “We think she should investigate to make sure the tax paid is the tax due…to make sure state-aid rules aren’t broken, and, essentially to make sure that the tax calculations aren’t done on some opaque basis”, SNP economy spokesman Stewart Hosie told the BBC.

The French are also set to come to a tax deal with Google soon which could – yet again – show a different rate of taxation, further exposing the shambles of the European Union tax system.

Google in a statement reportedly denied any wrongdoing saying that the group “respects the tax laws in all the countries it operates in” and “continues to work with the competent authorities”.

The Italian claim, which follows a judicial inquiry into Google’s tax arrangement, is the latest in Europe where governments are seeking to maximize the tax returns from multinational companies in particular in the tech sector.

Mr Anderson – whose Scottish Mortgage Investment Trust owns £120 million of shares in Google’s parent company, Alphabet – told The Times: “It is in the long-term interests of Google and others of that ilk to pay decent rates of tax… There is more for them to pay and I want them to pay more in the future”. “George Osborne might call this deal a “major success”, but to the rest of us it looks more like an embarrassment”.

Moscivi declined to comment on Google’s tax affairs when asked. Ultimately it’s Google shareholders and the U.S. that gains from the UK’s loss.

Vestager said it was unfair that different rules apply to larger companies than those adhered to by small innovative businesses.