Italian revenue agency spokesperson Sergio Mazzei said Google will start paying tax in Italy based on its earnings inside the country.
French tax authorities have also been chasing Google, and police have raided its offices in the country. The figure also included smaller amounts from disputes between 2014 and 2015 as well as between 2002 and 2006.
Thursday's agreement between Google and Italy relates mainly to corporate taxes the Italians say Google failed to pay between 2009 and 2015. We remain committed to Italy and will continue to help grow the online ecosystem'.
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This is "in addition to the corporate tax already paid in Italy for these years", Google said.
As European lawmakers grapple with how much tax technology companies should pay on their overseas operations, industry executives are considering repatriating hundreds of billions of dollars under the Trump administration's proposed "tax holiday", which would shrink the current levy of 35 percent, before deductions, on such income.
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The settlement comes after reports in January found that Google had offered to pay a tax bill of up to €280m to Italy's tax authorities. The U.S. tech giant agreed to pay $334 million in back taxes to the Italian government the latest settlement for a tech company in the Eurozone.
The new rules are expected to come into effect in 2018. Last August, the commission ordered Apple Inc.to return $13 billion to Ireland in unpaid taxes.
News.com.au reported that Treasurer Scott Morrison was looking to wring billions from Google and other big companies.
In late 2015, U.S. tech giant Apple paid 318 million euros to settle a dispute over its Italian earnings dating back to 2008.
Last year, Finance minister Michel Sapin said France would not negotiate with Google.