News Analysis: Italy's tax settlement with Google could set stage for more probes

U.S.-based Internet search giant Google and Italy's tax authority agreed this week to terms to end a long-standing tax dispute over 306 million euros (336 million U.S. dollars), in a deal that experts said would help set the stage for similar agreements in the future.

The settlement satisfies Google's tax obligations over a 14-year tax period from 2002 to 2015, at an amount far lower than the 800 million to one billion euros Italy reportedly sought when the investigation was opened last year.

But it is also a third higher than the 224-million-euro settlement figure that was leaked to Italian media in the final days of the negotiations.

According to Raffaele Barberio, director of the tech-savvy Key4Biz web site, the agreement was a victory in Italy's efforts to ensure big technology companies like Google paid their share of taxes.

"There has been an adversarial situation between the Italian state and big digital companies," Barberio told Xinhua. "This doesn't mean that the situation doesn't exist any more, but the wall has been breached. From the point of view of Italian tax collectors, it is a big step forward."

Barberio said he would be "surprised" if more investigations into online companies did not follow.

Francesco Brandi, a former government tax agency official working as a law professor with Rome's La Sapienza University, agreed.

"The biggest development here is not the extra cash for the Italian treasury, but the fact that Google and other major players will have to follow these rules from this point forward," Brandi said in an interview.

In a statement, Google, which is a subsidiary of the U.S. holding company Alphabet, Inc., said: "In addition to the corporation tax already paid in Italy, Google will pay an additional 306 million euros."

While the case was being negotiated, Google denied owing additional taxes in Italy on several occasions.

The central part of the case revolves around allegations that Google illegally lowered its tax obligations by logging profits in low-tax jurisdictions like Ireland.

The value of the deal with Google is just short of the 318-million-euro settlement Italy reached with Apple, Inc. in December 2015, still the largest single tax settlement case ever in Italy.

More recently, Italy opened an investigation in April into the tax obligations of U.S.-based online retailer Amazon, accusing the company of underpaying its tax bill by at least 130 million euros. Amazon has denied any wrongdoing. (1 euro = 1.10 U.S. dollars) Endit