Google's U.K. Unit Reveals Tax Charge and Jump in Profits

(Bloomberg) -- Google’s U.K. business is to pay 25 million pounds ($31.4 million) in U.K. corporation tax, according to its latest results, a year after the company was ordered to hand over 130 million pounds in back taxes to the government.

The U.K. subsidiary of Alphabet Inc.’s Google turned a profit, before taxes, of 148.2 million pounds for the year ending June 30 2016, an increase of 15 percent compared with the previous 18-month period. Revenue fell 12 percent to 1 billion pounds, according to Google U.K. Limited’s the annual report made public Friday.

In January last year, Google’s tax settlement with U.K. authorities set off a backlash as opposition politicians questioned the government’s handling of the case and whether the search giant was paying enough. A U.K. parliamentary committee the following month accused Google of being "disingenuous" in regards to its reposes in how it handles international tax rules.

"As an international business, we pay the majority of our taxes in our home country, as well as all the taxes due in the U.K." said a Google spokesperson Friday in an emailed statement. "We have recently announced significant new investment in the U.K., including new offices in Kings Cross for 7,000 staff.”

Google’s U.K. tax charge equates to 17.9 percent of Google U.K. Limited’s profit, less than U.K.’s corporate tax rate is currently 20 percent.

Google shifted more than 10.7 billion euros ($11.8 billion) in international revenue to a Bermuda mailbox in 2014 through a series of tax structures known as a "Double Irish" and a "Dutch sandwich," the most recent year for which figures are available. Doing so saved Alphabet some $2.4 billion in worldwide taxes that year, regulatory filings show.

At Google U.K. Limited, total staff costs dropped to 541.2 million pounds, down 12 percent from 616.8 million pounds the previous 18-month period.

While pay decreased, the amount of staff grew by 26 percent to 2,943. On average, each Google U.K. Limited employee received an annual salary of 183,897 pounds.

--With assistance from Jeremy Kahn

To contact the reporter on this story: Giles Turner in London at gturner35@bloomberg.net.

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Molly Schuetz