Surge in Google Ireland sales to €22bn offset as part of tax planning

Sales up 23% while after-tax profits jump 72% as “Google Network” partners sign up

The number of staff directly employed by Google Ireland last year increased 6% to nearly 3,000. The company says it also employs about 3,000 contractors on its Irish sites.

The number of staff directly employed by Google Ireland last year increased 6% to nearly 3,000. The company says it also employs about 3,000 contractors on its Irish sites.

 

Google Ireland, the Dublin-based hub through which the search engine diverts sales from across Europe, the Middle East and Africa, recorded a 23 per cent rise in revenues last year, to €22.6 billion.

Newly filed accounts show its after-tax profit jumped 72 per cent to €293.6 million. Google Ireland paid €46.5 million in Irish corporation tax.

Most of its extra €4.3 billion income, however, was wiped out by larger royalty payments to other parts of the Google empire abroad as part of the company’s extensive tax planning under so-called “transfer pricing” rules.

In commentary attached to the accounts, Google said its “administrative expenses” rose by about €3.5 billion to €16.9 billion. It provided no further details on the make-up of these expenses, which do not incorporate revenue sharing arrangements with other web companies. Those are accounted for separately.

Google attributed the rise in administrative expenses to “increased head count”, an “increase in sales and marketing effort”, and “an increase in the royalties paid to a group undertaking”.

Its average head count rose by about 250 employees and its total payroll cost €365 million, suggesting the bulk of the €16.9 billion in “administrative expenses” involved a cash royalty to another part of the group.

Royalty location

The company’s financial statements, which were filed on Friday afternoon, did not disclose the location of the entity to which the royalties were paid.

It has been reported in previous years, however, that Google Ireland has paid royalties to an entity in the Netherlands as part of the “Double Irish” tax avoidance strategy, which is being phased out under new State rules.

In previous years, the Dutch entity has moved these royalties on to other Google entities in tax-free offshore locations such as Bermuda.

A spokesperson for Google Ireland said the increase in “administrative expenses is consistent with the increase in sales”.

The number of staff directly employed by Google increased 6 per cent to nearly 3,000 by year’s end. It also employs about 3,000 contractors on its Irish sites, which include its two Dublin data centres and a sales hub in Dublin’s docklands.

Ronan Harris, the outgoing head of its Irish operations, attributed the surge in sales to selling more ads to a greater number of members of the Google Network – other websites that direct search queries through Google’s website.

“As Google grows, Ireland continues to benefit,” Mr Harris said. “In 2015 we opened our second data centre, bringing total investment in capital assets in Ireland to over €750 million.

“Dublin is recognised as a key driver of growth among our customers,” he added. “Last year, for example, we established the AppHub to help developers take advantage of the potential €60 billion European Union app economy.”