Workers at Google Ireland, the search group’s European sales hub, earn less than half the £160,000 average wage of colleagues in London despite the British sales team only providing a supporting role to their Irish counterparts.
Google bosses will be grilled by parliament’s public accounts committee this week over how they have managed to continue with their controversial Irish tax structures in the face of repeated promises from politicians to close these arrangements down.
The relationship between Google sales teams in London and Dublin is likely to be at the heart of MPs’ questioning.
Google Ireland booked £5bn in sales from UK advertisers last year, but paid no tax in the UK. The group’s controversial corporate structure means the UK subsidiary provides marketing services to Google Ireland. Meanwhile, UK customers buy advertising exclusively from the Irish company.
Four years ago, Matt Brittin, Google’s European sales boss, told MPs that staff in the UK only encourage British advertisers to buy from the search group, but the advertisers ultimately buy “from our expert team in Dublin”.
He stressed: “Anybody who buys advertising from us in Europe buys from Google in Ireland from our expert team.”
Despite the expertise of Google Ireland’s workforce, latest accounts show the business paid 2,577 staff wages totalling €244m for 2014, giving an average wage of €94,590, or £72,783.
This is less than half the £160,000 average salary paid to the 2,300 staff at Google UK, most of whom are employed to support the work of the Irish company.
Google Ireland has three directors, who were paid a combined sum of €1,644,000 (£1,265,000) in 2014, despite running a business with sales of €18.3bn (£14bn) – accounting for almost a third of Google’s global sales.
Despite comparatively modest pay for staff and directors, Google Ireland describes itself as “a global technology leader … [which] generates revenue by delivering relevant, cost effective advertising”.
On Thursday, Brittin will appear before the public accounts committee to answer questions about Google’s tax affairs for the third time. In particular, MPs want to ask questions about a £130m tax settlement it reached last month with HMRC, ending a dispute about past taxes stretching back 10 years. Critics have suggested Google, which is planning a £1bn new office development in London, received a “sweetheart deal”.
Three years ago, Brittin told the committee he understood how MPs, the public, some large advertisers on Google – and even some Google UK staff dealing with British advertisers – might feel the group was negotiating and closing sales in the UK. They were, however, mistaken, he said.
Margaret Hodge MP, the then chair of the public accounts committee, told Brittin his firm’s behaviour on tax was “deviously calculated and, in my view, unethical”. She added: “You are a company that says you ‘do no evil’. And I think that you do do evil.”
Also appearing before MPs on Thursday will be outgoing HMRC chief executive Lin Homer, along with Jim Harra, her head of business taxation. Both have faced questions on Google’s tax structures before.
MPs want to know why the chancellor’s new diverted profits tax (DPT), which was designed to stop certain technology groups diverting profits away from the UK, had failed to end Google’s practice of routing UK sales through Ireland.
George Osborne had promised the DPT would force technology companies to unwind their complex tax structures, which “abuse the trust of the British people”. Commentators and supporters referred to the DPT as “the Google tax”.
Google said: “After a six-year audit by the tax authority we are paying the amount of tax that HMRC agrees we should pay. Governments make tax law, the tax authorities enforce the law and Google complies with the law.”
