Company records also show Google Spain paid €6.48 million in corporate taxes in 2016, three times more than the €2.2 million it paid the previous year. The Tax Agency suspects that the Spanish subsidiary diverts much of its income to Ireland to avoid paying taxes. In June of last year, a team of Tax Agency officials showed up at the two sites that the technology giant has in Spain in search of evidence of fraud.
Google Spain paid €6.48 million in corporate taxes in 2016, three times more than the previous year
“It is no secret that international tax legislation is incredibly complicated,” said the company when asked about its fiscal policy in Spain. “That legislation is created by governments, and our job is to comply, as we already do, with the law in every country we operate within. We paid a great deal of corporate taxes in 2016 [the effective rate] was 19.3%, and most of these taxes are paid in the United States, which is where our headquarters are, and that is how the international tax system operates. We believe that simpler and more transparent legislation in this regard would be the best solution.”
The company’s administrators explain in their annual report that their books are open for inspection in terms of both sales tax (VAT) payments for the period of 2012 to 2014, and corporate taxes between 2011 and 2014. Although the firm admits that these inspections constitute a contingent liability, this is not reflected in its accounts, because, it says, it believes that “it is not probable” that it will need to pay more, considering that “the amount of any economic profits to be transferred can be reliably estimated.”
Google Spain saw profits of €19.47 million in 2016, almost four times more than the previous year, which saw it register €5.3 million. Revenue in Spain was €92.3 million last year, a 38.5% increase, although real income from Google activity in the country is much higher.
We have more employees, more investments in Spain, which is equivalent to more revenue for Google in Spain Company spokesperson
The company notes in its management report that the increase in sales is “attributable to a higher demand for company services and a revised price structure.” A spokesperson for Google Spain did not clarify which revision it was referring to in its accounts. “We have more employees, more investments, and more expenses in Spain, which is equivalent to more revenue for Google in Spain,” the spokesperson added.
As in previous years, auditors warned that Google Spain carries out “a significant part” of its operations for companies in the same group. In fact, 97% of the turnover of the Spanish subsidiary comes from Google Ireland. “The company has a contract with Google Inc. for the provision of related research and development services and a contract with Google Ireland Limited for marketing and support services, under the the Google group,” according to the company’s accounts. The bulk of revenue of the Spanish subsidiary, €89.92 million, comes from the Irish affiliate. The remainder, €2.4 million, is obtained through operations with its US parent company.
English version by Debora Almeida.