The Internal Revenue Service (IRS) is investigating how Google values software rights, and other intellectual property (IP), owned by its offshore Irish subsidiary.
The audit follows reports last year that Google pays an overseas tax rate of 2.4% (compared to the corporate tax rate of 12.5% in Ireland) and a company-wide tax rate of 22.2% (the US rate is 35%) by using double-Irish and Dutch sandwich structures to limit the tax due on its IP.
According to Bloomberg, Google is now under audit for these actions and the inquiry is focusing on the financial arrangements other Google subsidiaries - YouTube, Postini and DoubleClick - have made with Google Ireland to pay for access to the IP.
Google maintains the investigation by the IRS is routine.
