Public Accounts CommitteeSupplementary written evidence from Google

As requested, below please find Google’s response to your request that we provide extra clarification to some answers given by Matt Brittin during the oral evidence session of 16 May 2013.

Some of the Committee’s questions relate to a period of more than 10 years ago, cover hundreds of thousands of transactions, and refer to documents in the Committee’s possession which we have not seen. Since receiving your questions, we have sought to review our legacy systems (some of which are no longer readily accessible or available) and older documentation as best we could in order be as responsive to your questions as possible.

As discussed in our previous correspondence, we are grateful to you for agreeing to not publish or publicly quote the answer to Q138/177/178 on the grounds of commercial confidentiality.

Q18. Can you provide details of where accounts were systematically transferred from Google UK to Google Ireland?

Clients in the UK contracted first with Google Inc., then with Google Ireland Ltd. Since Google UK Ltd. had no authority to contract with UK customers, and Google UK Ltd. had no systems in place to bill UK customers, there was no systematic transfer of UK customer accounts from Google UK Ltd. to Google Ireland Ltd. Starting in 2004, Google Inc. commenced transferring its accounts with UK customers to Google Ireland Ltd.

Q22, 61, 62. Can you trace invoices sent from London/Were any invoices sent from the UK?

Although there may have been instances of invoices sent from Google UK offices, we have thus far been unable to locate any record of invoices issued in the name of Google UK Ltd., and our invoicing systems were not set up to bill on behalf on Google UK Ltd. Authorised invoices were issued in the name of Google Inc. or Google Ireland Ltd., and instructed customers to remit to one of those two entities.

The presence of UK addresses on some documents may have caused confusion. For example, some invoices may have required that customers make payments into a Google bank account at Citibank on the Strand. That account, however, was in the name of Google Ireland Ltd.

In addition, the Committee may have seen some documents likely to be what we refer to as “insertion orders”, which were not invoices but rather orders reflecting the advertising services requested by the client bearing a UK address in the upper left hand corner. Before the creation of Google Ireland Ltd., the insertion orders we have located and reviewed thus far contained links incorporating, or attached, Google Inc.’s terms and conditions. We have thus far been unable to locate any insertion orders signed in the name of Google UK Ltd.

We have identified rare instances in 2006 where third party vendors used by Google for charging credit cards held by advertising customers erroneously made charges in the name of Google UK, but remittance for any such erroneous charges were paid into bank accounts in the name of Google Inc. or Google Ireland Ltd., and not Google UK Ltd.

Q101. What percentage of sales by Google Ireland is through agencies?

Approximately 60% of revenue from UK advertisers came through agencies for the year 2012.

Q125, 127. Were people asked to pay in sterling into Google UK bank accounts?

We enable our customers to choose to pay for advertising with Google in their local currency, including in sterling. If a customer chooses to pay in sterling by wire transfer, the invoice would instruct the customer to remit payment to a Google Ireland Ltd. owned bank account located within the UK.

Q148, 149. Do you have an agreement with the Irish Government regarding the withholding of tax?


Q150, 151. What tax rate do you pay on transfers from Ireland to Bermuda/Do you just transfer from Ireland to Bermuda without any tax implications?

We do not make direct transfers of royalty payments or other payments subject to withholding tax from Ireland (ie, Google Ireland Ltd. or “GIL”) to Bermuda (ie, Google Ireland Holdings or “GIH”). Rather, we make transfers from GIL to Google Netherlands Holdings BV (“GNBV”), and from GNBV to GIH. No withholding taxes are payable on these transfers.

Our use of GNBV as part of our corporate structure is a legacy from when we set up our international business over a decade ago. We structured it that way because of concerns about potential Irish withholding taxes. As mentioned in our previous testimony we do not believe that our use of GNBV has a material effect on royalty payments or other payments subject to withholding tax from GIL, primarily because of changes made in 2010 to Irish tax laws and regulations.

Q184. Did Ernst and Young help you to design your corporate structure?

We used an external law firm as our primary advisor on the design and implementation of our corporate structure. Ernst and Young has long provided Google with a range of consultancy advice on many issues over the years, including advice relating to our corporate structure and related tax matters.

3 June 2013



Prepared 12th June 2013