The company doesn't pay any taxes in the UK, its second biggest market

Dec 21, 2009 11:56 GMT  ·  By

Google is one of the biggest players in the tech industry and one of the largest companies in the world, bringing in some serious revenue numbers every year. At those levels, the taxes the company pays for its operations are also significant, so much that choosing the right country to pay those taxes for its international revenue can save it several hundred million pounds a year, according to the Guardian.

Outside of its US operations, the UK market is the biggest revenue earner for Google, yet the company doesn't pay any taxes whatsoever in the country. Instead it reports all revenue from the UK, from all over Europe in fact, in Ireland where the company has its headquarters for the continent. Thanks to the much lower corporation tax levels, Google can avoid paying as much as £450 million in the UK alone. And the savings can be significant, taxes are as two to three times lower in Ireland.

Google does have an affiliate in the UK, but it only files expense reports in the country which add up to about £177 million for 2008. It also reports a revenue of just £150 million meaning that, as far as the accounting is concerned, Google is running at a loss in the UK. However, if the company's financial statements paint a rather different picture, the UK is the second biggest revenue earner after the US bringing in £13.5 billion ($21.8 billion) in 2008, a full 14 percent of its earnings for the year.

The company is, by far, not the only one doing this, all large corporations, even smaller ones with an international presence, will try to find the market with the most flexible tax system to set up shop. The practice in itself isn't illegal, but it certainly isn't viewed very well, especially with the economy being what it is. The company, though, argues that lower taxes alone weren't the reason behind basing its European operations in Dublin, Ireland and that other factors were considered.