The European Commission says that the £130M ($185M) tax deal struck between Google and the UK government may amount to “illegal state aid” by offering the company better terms than those available to smaller businesses.

Google first came under fire for its tax arrangements in the UK in early 2013, when it was accused of funneling profits from UK Adword sales through Ireland, resulting in the company paying just £6M ($8.5M) tax on a turnover of £395M ($565M). In the new deal, it agreed to change its accounting practices to pay more tax in the UK, and to pay a lump sum in back tax …

The relatively low size of the settlement has been widely criticized in the UK.

EC competition commissioner Margrethe Vestager told BBC Radio 4 that the Commission would be willing to investigate the deal if it received a formal complaint.

If we find that there is something to be concerned about, if someone writes to us and says, well, this is maybe not as it should be, then we will take a look.

The Verge reports that the Scottish National Party subsequently submitted just such a complaint, meaning than an investigation is likely to take place.

Photo: Rex Features

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