Google will pay 10 years worth of back taxes, totaling £130 million, and higher taxes in future in the U.K. after an agreement with the country’s revenue service.
“We will now pay tax based on revenue from U.K.-based advertisers, which reflects the size and scope of our U.K. business,” Google said in a statement.
“The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result. This settlement reflects that shift and is in line with recent OECD guidance,” the company said.
A spokesperson for Her Majesty’s Revenue and Customs welcomed the deal, which was first reported by the Financial Times.
The deal “means that Google will pay the full tax due in law on profits that belong in the U.K. Multinational companies must pay the tax that is due and we do not accept less,” said Patrick O’Brien.
The deal stems from an investigation into Google’s 2013 tax bill of £20.5 million (€27 million) in the U.K., the largest market for the company outside the United States.
Margrethe Vestager, the European commissioner for competition, is currently investigating sweetheart tax deals for multinationals in several EU countries.
The Commission is expected to release a series of proposals to close tax loopholes next week.