3 May 2013 - 1:23pm | posted by | 2 comments

Google tax row: 80% of media buyers say they deal with London when buying advertising from Google

Google tax row: 80% of media buyers say they deal with London when buying advertising from GoogleGoogle tax row: 80% of media buyers say they deal with London when

A poll organised by The Drum seems to suggest that the UK digital and media buying community disagree with Google’s assertions that its UK team is not engaged in advertising sales.

Google claims that its UK staff do not sell advertising but provide sales and marketing support to those dealing with its Dublin office.

The distinction is a key part of a strategy which has reduced its tax exposure in the UK. Between 2006 and 2011 the company has paid just £10m on British revenues of £11.5bn. If HMRC were to deem that UK based employees do sell to UK clients the company could face larger bills as it might be considered to have tax residency.

The controversy gained momentum after an investigation by Reuters found that many statements on Google’s own website and the social media profiles of London staff were inconsistent with its tax position. The LinkedIn profiles of 150 staff were analysed and it found that many claimed to be involved in the sales process.

Yesterday, The Drum sent out a questionnaire to those involved in the other side of the sales equation – buyers- to get their take on the issue.

By noon today 29 responses had been received from media buying and digital agencies with the majority saying they considered Google’s London office to be very much a sales operation.
The main findings include:

• Almost 80 per cent of respondents said they dealt with London when buying Google advertising. Around 14 per cent said they used Dublin, the remainder said they did not know.

• When asked what they considered was the primary role of Google’s London advertising team 80 per cent said it was sales. 17 per cent said it was support.

• When asked what they considered they were doing when dealing with Google’s London team 76 per cent said they considered they were buying from them. 17 per cent said they were receiving general advice in order to buy through Dublin

When asked whether they believed Google should pay more tax in the UK 83 per cent said they should. 3 per cent said they shouldn't and 14 per cent were undecided.

Said one respondent: “It is worth noting that the huge majority of Google ads are bought through self-serve and so with this in mind there is only a small percentage that is actually bought directly with either the UK or Dublin team. In this case, the teams are very much there for support. However, when it comes to direct buying of ads the majority happens in the UK.”

Said another: “The London teams are the ones putting forward the proposals and the briefs, they therefore should be considered to be the ones who are actually doing the selling. The only interaction we have with Dublin is when we want to confirm a buy and then we are sent over an invoice. But in terms of selling the actual product in, that is entirely the London office.”

Another respondent agreed, “Our sign offs go to a London fax number so however the initial sale is completed, for larger brands the money goes to the London office, or at least through it.”

As a result of the row Google’s head of northern European operations Matt Brittin is to be recalled by the Public Accounts Committee, who are looking into the company’s tax status. He told them when he last appeared that “nobody (in the UK) is selling.”

It is a position the company is sticking too. In a statement yesterday Peter Barron, its director of external relations, said "The Reuters article is wilfully misleading. As we told them in our statement, Matt Brittin clearly explained the roles of UK staff in hours of evidence to the Public Accounts Committee.

“He said: ‘if [customers] want to buy advertising from us they are encouraged to do so by our people in the UK - they will buy it from our expert team in Dublin... the people on the ground [in the UK] are helping people make the most of the web and the people in Ireland are helping to operate the systems and sell advertising to the businesses that want to work with us.’”

However, several respondents to The Drum survey remain to be convinced. One said the issue, “has has tarred their otherwise very clean image for me.”

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Comments

4 May 2013 - 14:41
noel_young's picture

What is it about Dublin then? Not only Google but Facebook, with 500 jobs (biggest office outside its California HQ) and Yahoo!, adding 200 more jobs. Is it the weather - or just that theyr'e all sheltering from the downpour of UK taxes" Must have a Starbucks coffee to get over all this.

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7 May 2013 - 10:02
neale_gilhooley's picture

Based on this case it appears to be the tax status. Being 'tax free' would increase the margins of every UK company significantly, perhaps enough to bring us all our of recession.

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