Google Ireland pays exchequer €218m to settle unspecified 'tax matters'

The tax payment was for "adjustments for corporation tax of prior periods", according to the latest statement for its Ireland-based company.

Taoiseach Micheál Martin, Google community engagement manager Teresa Weafer, and head of Google Ireland Nick Leeder at the launch of a local employment initiative in Dublin in September. 

Google Ireland struck an agreement with Revenue to pay over €218m in corporation tax to resolve unspecified "tax matters" over previous years.  

The amount paid also included interest payments on the tax, the latest accounts from Google Ireland Limited reveal. The €218m payment was likely paid over to the exchequer last month, the Irish Examiner believes.       

The latest statement for its Ireland-based company was filed today and covers, for the most part, the tech giant's 2020 financial year.

However, the disclosure in the accounts — which were signed off as recently as November 15 — show the tax payment for "adjustments for corporation tax of prior periods" of almost €218.2m.

The latest exchequer returns published at the start of the month show corporation taxes brought in almost €1.5bn in October, which was €964m more than anticipated.

October's corporation tax haul was boosted by the settlement of tax cases that accounted for €300m of the receipts, the Department of Finance said at the time. 

The accounts of Google Ireland Limited give an annual glimpse into the huge amounts of revenues that pass through the Irish-registered company. 

Google Ireland Limited encompasses the revenues generated by the Google-owner Alphabet in Europe, the Middle East, and in Africa from ad revenues of its search engine and from YouTube. It also has two data centres in Ireland and employs almost 4,315 people.  

The accounts show Google Ireland turnover rose to €48.4bn in 2020 from €45.7bn the previous year, while its cost of sales fell sharply, to €12bn from €14.3bn. 

Pre-tax profits rose to over €2.85bn, up from €1.94bn in 2019. It paid a total corporation tax bill of €622m — up from over €263m. This year, it paid €3bn in "interim dividends" to its owner Alphabet, according to the Google Ireland accounts. 

After fighting a rearguard battle, the Government signed up in early October to plans led by many of the world's most powerful economies to overhaul the way multinationals are taxed around the world. 

However, there is much uncertainty about how the global pact will, in time, weigh on tax revenues to the Irish exchequer and on future flows of foreign direct investment into Ireland. 

The pact means that as early as 2023 that Ireland's decades-old tax regime and the headline rate of 12.5% will go up to 15%. Most Irish small companies will continue to pay tax on their profits at the existing 12.5% rate.  

The exchequer last year raised almost €12bn in corporation tax receipts that accounted for a record 21% of all the Government's tax revenues.       

It won't say which multinationals pay what amounts of tax, but it is well known that a mere handful of big corporates account for around 80% of all the State's corporation tax revenues. That has long raised concerns that the public finances depend hugely on the taxes raised from a small number of mostly US-owned computer and pharma giants, such as Google, Apple, and Pfizer.     

The exchequer returns in recent months showed that corporation tax receipts continued to play an outsized role in the public finances. 

Receipts from the corporates for the first 10 months of the year were running at €9.5bn — and ahead by €2bn of the haul that had been anticipated.

That means that corporation tax receipts will likely exceed the €12bn collected for the whole of last year because the big-paying months for companies to pay their taxes are still to come. 

Overall, the exchequer pulled in €5bn in tax receipts in October, of which 30% were accounted for by corporation tax. 

"The company will continue to invest in the business and to provide competitive compensation programmes in order to attract and retain high-quality staff," Google Ireland Limited said in the latest accounts.