Here’s how Google pays the tax authorities and avoids criminal proceedings
Google closes a tax dispute with the Italian tax authorities by paying 326 million euros and the Milan Public Prosecutor's Office, which was investigating Google Ireland Limited for tax evasion, requests the dismissal of the proceedings. All the details
Google settles tax dispute with the Italian tax authorities by paying 326 million euros. And at the same time, the Milan Public Prosecutor's Office, which was investigating Google Ireland Limited for tax evasion, requests the dismissal of the proceedings. This is what can be seen from a note signed by the Milan prosecutor, Marcello Viola (in the photo).
GOOGLE PAY THE TAXES AND AVOID CRIMINAL TRIAL
In an agreement stipulated on 5 November 2024 and which has so far remained confidential, Google Ireland, while continuing to counter the Revenue Agency's thesis, puts its hand in the wallet for 326 million euros, and in exchange brings home the fact that tax avoidance operations do not lead to actions punishable by criminal tax laws: which is why the Milan Prosecutor's Office now notes the impossibility of predicting the reasonable forecast of conviction required by the Cartabia reform as a parameter for carrying out criminal action, and therefore requests the dismissal of the accusation of "failure to return tax returns" for 2016-2022 for which an Irish Google manager was under investigation.
WHAT THE MILAN PUBLIC PROSECUTOR WRITES ON GOOGLE
In fact, the communication from the prosecutor Viola specifies that the Milan Prosecutor's Office "formulated to the Judge for Preliminary Investigations a request to dismiss the proceedings" against "the Irish company Google Ireland Limited following the outcome of the investigations delegated to the soldiers of the Economic-Financial Police Unit of the Financial Police of Milan and at the end of the assessment procedure with settlement concluded by the company with the Revenue Agency for the years from 2015 to 2019".
THE INVESTIGATION ON GOOGLE
The investigation by the Economic and Financial Police Unit of the Milan Financial Police had hypothesized a tax fraud of almost 900 million euros between 2015 and 2019 with the presence in Italy of a "hidden stable organisation" of Google made up of the "servers and technological infrastructure" for the operation of the digital services offered by the platform.
THE ACCUSATIONS ADDRESSED TO GOOGLE BY THE PM
The Prosecutor contested the failure to submit the annual income tax returns produced in Italy and the withholding tax declarations that Google Ireland should have applied on the royalties paid to the foreign companies of the same Group on the basis that the investigations had "emerged that the foreign company, in relation to the activities carried out on the national territory, had failed to declare and pay the taxes on the income produced in Italy through a hypothesized hidden stable organization of a material nature consisting of the servers and the technological infrastructure essential for the functioning of the platform of the same name for the offer of digital services".
ADVERTISING SPACES DOSSIER
During the investigations, "the entire economic activity carried out by the company was reconstructed , with particular reference to the revenues achieved through the sale of advertising space, with the consequent challenge to the failure to declare the impressive income deriving from these operations".
WHAT THE INVESTIGATORS WROTE
The investigating magistrates underline "the failure to present the annual returns of income produced in Italy and the failure to present the annual tax withholding declarations, in relation to the withholdings that Google Irl should have applied on the royalties paid to foreign companies belonging to the same Group, due to the use and exploitation, by the permanent establishment, of all the programs, algorithms , trademarks and intellectual properties constituting, as a whole, Google technology".
HOW THE JUDICIAL MATTER IS CLOSED
It will never be known whether the accusatory theorem put in place by the Milanese prosecutor's office would have withstood the trial given that with the 326 million euros put on the table by Google to settle the matter with the Italian tax authorities, the investigating judges have made the request to dismiss the entire proceeding.
THE COMMENT FROM CORRIERE DELLA SERA
Luigi Ferrarella, judicial expert for Corriere della Sera , commented : “Google was so good at insinuating itself into Italian tax rules that it cannot be argued that it evaded taxes in the (unsubmitted) 2016-2022 tax returns, however in the opinion of the Italian tax authorities it abused tax law to evade the payment of those taxes which were technically not evaded. And in the end the American multinational and the IRS find themselves halfway: Google paying 326 million euros to the Revenue Agency despite its reiterated regularity of conduct, and the Revenue Agency (which started from an initial request of 1 billion euros) admitting that no tax rules were violated by Google, and that the "peculiarity of the matter" presents "elements of interpretative uncertainty".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-come-google-paga-il-fisco-ed-evita-il-processo-penale/ on Wed, 19 Feb 2025 11:10:46 +0000.