Google pays €17m tax on €15.5bn revenue

Google’s Irish-based operation increased its revenue in 2012 by almost a quarter to €15.5 billion, according to accounts filed over the weekend.

But, after charging "administrative expenses" of almost €11 billion, which includes royalties paid to other Google entities abroad, Google Ireland paid just €17 million in corporation tax last year.

The company, which at year end employed 2,200 staff at its European, Middle East and Africa (Emea) headquarters on Barrow Street in Dublin, boosted its gross profit by 22 per cent to more than €11 billion. Its administrative expenses also jumped by €2 billion, however, wiping out most of the gains in operating profit.

Royalty payments
Google attributed the rise in expenses to an increased headcount, marketing costs and increased royalties. Staff numbers rose by 100 in the period, so the bulk of the €2 billion is likely to be accounted for by increased royalty payments to other Google companies.

Google Ireland recorded a pretax profit of €154 million in 2012, up from just over €24 million the previous year. The €17 million of corporation tax was more than double the amount it paid in 2011.

Google’s global tax strategy, which alongside other multinationals came under heavy scrutiny earlier this year from UK politicians, means the internet giant pays large royalties to other Google companies, some of which are ultimately controlled from tax havens such as Bermuda.

Accounts filed with the Companies Registration Office show the Irish business owed €697 million to other group companies at the end of 2012, with a further €253 million owed to its parent company in California.

John Herlihy, who heads Google's Emea headquarters, said 2012 was a period of "sustained growth" for the Irish operation. "It reflects the strength of the European digital economy, which the EU Commission estimates is growing seven times faster than the traditional economy."

Google has invested heavily in Dublin in recent years. It opened a €75 million data centre in 2012, as well as refurbishing and redeveloping its Barrow Street base. The accounts value its buildings at €305 million, up from €237 million at the beginning of the year.