GOOG: Italy passes "Google tax," legality questioned

Italy passes "Google tax," legality questioned • 11:14 AM

• In a move that other EU states might try to replicate, Italy's Parliament has passed a law that requires Italian companies to buy Internet ads from companies/subsidiaries based in Italy, rather than tax havens such as Ireland and Bermuda.
• The bill has widely been referred to as the "Google tax" (GOOG), owing to the Web giant's huge online ad share and frequent use of offshore subsidiaries to lower its tax bill. Italian regulators have been probing Google's transferring of profits to an Irish subsidiary for more than a year. U.K. regulators have also taken an interest in Google's tax payments.
• However, some lawyers think Italy's move is in violation of EU law, and is thus unlikely to be enforced. A final resolution to the issue might not happen until the OECD ratifies a plan to deal with corporate tax havens; the organization currently expects to do it by the end of 2015.
• The stakes are high for Google: International sales accounted for 56% of the company's Q3 revenue, and a large chunk of those sales came from EU states.

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