Google declares losses in Spain

Google is one of the companies who are showing international concerns over their ability to transfer profits from one jurisdiction to another and avoid for being taxed only on their earnings.

The company, which dominates the digital advertising market, has reported losses in its Spanish subsidiary, Google Spain, for the second consecutive year, according to an act approved June 29 by the sole member of the company,
Google International LLC, in Mountain View, California.

Specifically, Google have declared losses of around 74,683.24 Euros in Spain for the year 2011, compared to 639,499.42 Euros last year. With this, the tax base to the corporation tax is minimal, less than 400,000 Euros, and after
adjustments for deferrals, Google comes out in favour on income statement and a statement to return.

The annual report on the company approved by Google International LLC said in late June that the investigation of Hacienda open in early 2011 to check the VAT returns, income tax and corporation tax of the company from 2006 to
2008 remained open, although according the company, which has always maintained that acts according to the current tax law, there is no risk of significant amounts in tax matters.

Google Spain is mainly engaged in the advertising market for the Spanish customers. But advertising does not bill those customers but what it does is re-invoicing to other group companies (mainly Google Ireland) based on costs
incurred plus a small margin of 8% or 10%, according to the contracts signed between group companies. 

The Spanish subsidiary handles the marketing and demonstrations, but the hundreds of millions of advertising Spanish customers are billed from Ireland.

In turn, Google manages have transferred those benefits to tax havens, so that the company might escape most of the profits even the reduced 12.5% rate ??according to the Irish corporation. In fact, Google pays just over 3% of
its profits from outside the U.S.a

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Posted by Farasat Ali on Nov 7 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry