Alphabet’s Google is once again having to pay out millions of dollars in Europe to settle a tax investigation.

Reuters reported prosecutors in Milan as saying on Wednesday that they plan to drop a case brought against the European division of Google, after the company agreed to pay 326 million euros ($340 million) to settle a tax claim.

Although this is a huge amount of money, Google’s $340m settlement pales into insignificance compared to Apple, which in September last year had been ordered by the Court of Justice of the European Union (CJEU) to pay Ireland €13bn (£11bn or $14.4 billion) in unpaid taxes.

European taxes

According to Reuters, the agreement with Google covers the period between 2015 and 2019 and the covers sanctions, penalties and interest, Italian prosecutors said in a statement.

It is understood that the Italian investigation focused on Google revenues from the sale of advertising, and prosecutors had cited the presence of servers and other infrastructure in Italy.

In 2024 Italy had asked Google to pay 1 billion euros in unpaid taxes and penalties, seven years after the tech giant had settled a previous landmark tax dispute with authorities in Rome.

In 2017 Google had paid 306 million euros ($319m) to settle the previous case that found it had a permanent presence in Italy.

And it should be remembered that Google has experienced tax issues with other European countries.

In 2016 for example, Google said it would pay £130m in back taxes after striking a deal with the UK’s HMRC, amid repeated and vocal accusations that Google was not paying “its fair share of tax” in Britain.

And in September 2019 Google confirmed it would pay French authorities nearly 1 billion euros (or $1.1bn) to settle a fiscal fraud probe that had begun in 2015.

It was alleged that Google had failed to pay its dues to the French state by avoiding to declare parts of its activities in the country.

The French settlement comprised a fine of 500 million euros and additional taxes of 465 million euros.

The French finance ministry had been seeking 1.6 billion euros from Google.

Tax push

European governments in the past decade have sought to rein in large American tech companies, which were seen as paying minimal tax in Europe due to their use of accounting loopholes.

American tech giants tended to base their European headquarters in low tax regions such as Ireland or Luxembourg.

For their part, tech companies have previously defended their tax structures, and insist they abide by tax laws as they were written at the time.