Google’s operation in Dublin is integral to its global business but the organisation insists the advent of the Alphabet holding company structure will have no bearing at all on the Irish unit.
“The restructuring announcement re Alphabet will have no implications for Google Ireland,” said a Google spokeswoman in Dublin.
The Irish division, which employs almost 5,000 people, is seen as a bellwether of the internet giants who have made their home in the Silicon Docks area. Google’s arrival in Ireland in 2003 is credited as the catalyst that encouraged other Californian firms to follow suit.
The company continues to deepen its Irish roots. Last year it spent €65 million to buy the Grand Mill Quay building at Barrow Street. Aggregate payroll costs in 2013, when it employed 2,288 on average, were €273 million.
Google is a big beneficiary of Ireland’s corporate tax regime. Its annual report says Ireland is one of two “major tax jurisdictions”, the other being the US.
Still, its tax affairs here are not without controversy. The company is known to have deployed the controversial “double Irish” tax mechanism, which plays on differences between Irish laws and the law in other jurisdictions to help firms based here to curtail the tax due on their profit.
In the face of mounting international pressure, the Government resolved last October to phase out the “double Irish” and close it off to new entrants. In advance of that move, ranking Irish officials expressed concern that the scheme was undermining the State’s “international tax credibility”.
Irish benefits
Understanding quite what benefit Google draws from the measure is another matter, however. Publicly available accounts for Google Ireland Ltd, one of its main Irish vehicles, are silent on the matter.
This entity’s immediate parent and controlling party, Google Ireland Holdings, has had unlimited liability status since 2006 so it is not obliged to file financial accounts in public. In turn, the vehicles that hold shares in Google Ireland Holdings are based in Bermuda.
For all that, the latest available data shows that Google Ireland Ltd increased turnover by €1.5 billion to €17 billion in 2013. This entity paid out €11.74 billion in administrative expenses in the year, including royalties to other Google entities in its international network.
Pretax profit increased to €189.13 million from €153.89 million. The final 2013 tax charge was €34.58 million, a small sum compared with the overall value of the sales booked by the Irish business.
In essence, the creation of Alphabet will split the core, highly profitable search engine and advertising business from Google’s riskier “moonshoot” projects to develop driverless cars, robots and other experimental ventures. In the manner of a conglomerate, each division will report separately into Alphabet.
This flows from market demands for more transparency. The objective, according to co-founder Larry Page, is to make the business “cleaner and more accountable”.
However, the move is unlikely to reveal much about the inner workings of the Irish operation and its place in Google’s tax planning.
