Europe might be about to investigate Google over tax

Larry PageGetty Images/Justin SullivanLarry Page, CEO of Google parent company Alphabet.

The stage is set for Europe to investigate Google over its tax arrangements.

On Thursday morning, EU Commissioner Margrethe Vestager told the BBC that she is “willing” to investigate the Californian tech giant’s tax set-up in Britain. “If we find that there is something to be concerned about. If someone writes to us and says ‘well maybe this is not as it should be’ then we will take a look,” she said.

In a midday press conference, the European Commission confirmed it had already received a complaint from a member of the Scottish Parliament over Google’s taxes.

Despite probing from journalists, a spokesperson refused to confirm that there will be a “formal investigation” into the company.

“We’ve recieved a letter from a stakeholder … [and] will look into it,” they said. But it looks increasingly likely.

The tax arrangements of multinational companies in Europe is coming under heavy scrutiny right now. Google has come under the spotlight after it emerged it made a £130 million tax deal with the UK government, which critics allege amounts to a 3% effective tax rate.

Apple (which, like Google, is headquartered in Ireland) is facing investigation by the European Commission over its tax affairs in Europe. Bloomberg has reported that the Cupertino company may owe as much as $8 billion (£5.5 billion) in back taxes.

Speaking to The Financial Times, Apple CFO Luca Maestri said that Apple should not be made to pay any alleged owed taxes. “My estimate is zero. I mean, if there is a fair outcome of the investigation, it should be zero.”

Google insists it pays the proper amount of tax. In a letter to The Financial Times, Google VP of communications and public affairs Peter Barron wrote: “Governments make tax law, the tax authorities independently enforce the law, and Google complies with the law.”

On Thursday morning, the European Commission also announced new proposals to crack down on tax avoidance in Europe, requiring EU EU member states to “apply a minimum level of protection against avoidance … [to] safeguard the single market.”

“Let me put this in a nutshell,” European Commission member Pierre Moscivi said. “The days are numbered for companies that avoid paying tax at the expense of others.”

Moscivi declined to comment on Google’s tax affairs when asked. “We cannot comment on individual tax arrangements and agreements, not least because we have not seen the details of how the agreement was reached,” he said.

But he added: “The commission is clear — all companies must pay their fair share of taxes where they earn their profits.”

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