From The Sip Trunking Experts

[December 14, 2005]

Google says expansion in Dublin is not tax related

(The Irish Times)Google, the internet search engine company, will create about 650 jobs in Dublin, more than doubling its Irish workforce as it steps up expansion in Europe.

Minister for Enterprise, Trade and Employment Micheal Martin announced yesterday that Google would add more than 600 jobs in Ireland.

The company's latest expansion in Ireland, which will take place over two to three years, "is not tax-related," said Angus Kelsell, Google's European finance director.

"It is to do with supporting our European business."

The number of Google employees worldwide has risen to 5,000 from 2,300 a year ago as more advertisements are placed online instead of in traditional media, according to John Herlihy, the company's European director of online sales and operations.

Google's European headquarters in Barrow Street, Dublin, are the company's largest operation outside the US.

The Irish unit, set up in 2003, serves Google customers in more than 35 countries.

To accommodate its expanding workforce, Google signed a lease to add a further 100,000sq ft (9,290sq m) to its Barrow Street building, the company said yesterday.

"We're in the process of building a significant scale operation in Europe," Mr Herlihy said. "We think Ireland is a good environment for companies to set up and expand their operations."

Thanks to its Irish operation, California-based Google has "significantly lowered" its tax bill for the first nine months of 2005, according to documents lodged with the Securities and Exchange Commission in the US.

The company's effective tax rate fell to 31 per cent from 39 per cent, indicating a tax saving of about 100 million a year from its Irish business.

That is mainly because more of Google's earnings came from its Irish unit in 2005 than in 2004, and are therefore taxed at the Irish rate of 12.5 per cent instead of the US rate of 35 per cent, the documents showed.

Google has two operations in Ireland, according to recent filings to the Companies' Registration Office.

One of the operations, Google Ireland Holdings Ltd, received $388.6 million (325 million) in royalty payments in 2004.

Royalty payments for intellectual property developed in Ireland are not subject to Irish tax.

The other operation is Google Ireland Ltd, the operating firm for the company's activities in Europe, Africa and the Middle East.

This unit, which is involved in the sale of advertisements on the search engine, makes the royalty payments to Google Ireland Holdings.

"Since its inception in Ireland, Google's business has rapidly developed well ahead of expectations," Mr Martin said in a statement yesterday.

"This decision yet again demonstrates that Ireland is by far and away the primary location for the digital media industry in Europe and second only to Silicon Valley."

In the past two years, US technology firms including Yahoo, eBay and Amazon have created jobs in Ireland.

The influential American journal Tax Notes said in a study last year that Ireland was the most profitable foreign base for US companies, citing official figures from the US department of justice.

The Irish subsidiaries of US companies doubled their earnings in the four years to 2002 to $26.6 billion, the journal's study showed. Ireland further cut its corporate tax rate to 12.5 per cent in 2003.

Google was founded in 1998 by Stanford students Larry Page and Sergey Brin.

About 83 per cent of European internet users, or 133 million people, were using Google by the end of last September, according to consultants Comscore Media Matrix.

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