Italy claims 1 billion euros in unpaid taxes from Google

MILAN (Reuters): Italy is asking Google to pay 1 billion euros ($1.07 billion) in unpaid taxes and penalties, three sources with direct knowledge of the matter said on Friday, seven years after the U.S. company settled a landmark tax dispute with Rome authorities.

“We comply with tax regulations in all countries where we operate, including Italy,” a Google spokesperson said in a statement, in response to a Reuters query about the claim. “We cooperate with the authorities.”

The sources said Italy’s Revenue Agency has started an adversarial process with Google which may end either with a settlement or with the opening of a judicial litigation.

The investigation was launched in December 2022, and the claims cover the years 2018 to 2022, one of the sources said.

Just as in the previous investigation, the probe led by Milan prosecutors alleges that Google did not file and pay taxes on revenues generated in Italy, but this time the basis for the accusation is different, the sources said.

In 2017, Google paid 306 million euros because it was deemed to have a permanent establishment in Italy on the basis of its personnel operating in the country.

Now the challenge has been mounted on the basis of the digital infrastructure it has in the country which allows it to operate and generate revenue. This is the same approach that was used in a recent Italian tax settlement with Netflix.

Two of the sources said that if a settlement is reached, the line of investigation will then be applied to all the multinational web companies that are been under the scrutiny of Milan prosecutors.