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Google Advertising Government The Almighty Buck

Italy Approves 'Google Tax' On Internet Companies 236

Posted by Soulskill
from the all-about-the-benjamins dept.
recoiledsnake sends this news from Bloomberg: "Italy's Parliament today passed a new measure on web advertising, the so-called 'Google tax,' which will require Italian companies to purchase their Internet ads from locally registered companies, instead of from units based in havens such as Ireland, Luxembourg and Bermuda. Google, for example, says that it sells nearly all its advertising in Europe from an Irish unit, leaving little taxable profits in the countries where its customers are based. That unit in turn pays royalties to a second Irish subsidiary, which says its headquarters are in Bermuda. Google last year moved nearly $12 billion to the Bermuda unit, the majority of its worldwide income, cutting more than $2 billion off its global income tax bill. Google's Italian unit last year reported total income taxes of just 1.8 million euros, corporate filings show."
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Italy Approves 'Google Tax' On Internet Companies

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  • by the eric conspiracy (20178) on Tuesday December 24, 2013 @10:20PM (#45779877)

    Really this is a global problem, where an entity can set up an extraterritorial operation and avoid taxation.

    Amazon does it to avoid sales taxes and so forth in the United States. Google and Apple do it to avoid taxes in particular countries.

    Simply these shenanigans will cause states and countries to extend their cooperation across these boundaries. Eventually there will be a national sales tax system, and an international sales tax.

  • by haruchai (17472) on Tuesday December 24, 2013 @10:24PM (#45779901)

    Except that the corporations haven't chosen to go where taxes are LOW; they've chosen the places where taxes are ZERO.

  • The text of the law (Score:5, Informative)

    by pmontra (738736) on Wednesday December 25, 2013 @06:29AM (#45781129) Homepage

    This is a non authoritative translation of a part of the law that I believe TFA missed, legal-Italian to plain-Italian to plain-English (as good as I can get it). Italics are mine.

    Online advertising spaces and sponsored links in search engine result pages that can be viewed on the Italian territory during a visit to a web site or when using on online service on landline or mobile network, must be bought exclusively by companies with a registered Italian VAT account. This applies also to the case in which the sale has been made by the means of media centers, third parties and advertisers.

    Think about the implications of the part in italics. Your US company buys an ad in English from Google aimed to the US market. Unfortunately I end up seeing it from my computer located in Italy. Ops, somebody is in trouble now, either you, Google, me or a combination of those three parties. There is nothing in the law about what happens in case of violations and to whom it happens.

    Furthermore TFA missed that the law binds companies like Google to register a VAT account in Italy, not to pay taxes there. They'll end up paying just VAT there, which by the way comes from Italians, not from Google. The law aims at quantifying the turnover of those companies in Italy, which can only be estimated now. Unfortunately the way it's worded makes it difficult to enforce.

    Luckily a motion [] (in Italian, Google translation to English here []) has already been filed to suspend it. For another take on it you can read this Google translated post from [].

    PS: odd thing to do for me on Christmas morning :-)

  • by IamTheRealMike (537420) <> on Wednesday December 25, 2013 @08:34AM (#45781431) Homepage

    In some countries (like Ireland), yes it was the banks.

    In countries like Italy, it was largely the governments. In countries like Greece, it was 100% the government.

Take care of the luxuries and the necessities will take care of themselves. -- Lazarus Long