Google settles huge £259m tax bill to end criminal investigation into alleged avoidance

Italy’s tax agency said: “We have also begun the process of drawing up an agreement that will ensure Google pays the correct taxes in Italy in the future.”

The tax authority, which agreed a similar deal with Apple in 2015, added that it is committed to cracking down on the fiscal behaviour of technology giants in Italy. Apple paid €318m for taxes due between 2008 and 2013.

Individual countries and the European Commission have heaped pressure on technology giants to back-pay taxes avoided by booking income in countries such as Ireland and Luxembourg.

The Commission last year accused Ireland of helping Apple to artificially lower its tax bill for two decades and ordered the government to claw back a record-breaking €13bn.

The search giant is facing another case in France where the authorities believe it owes €1.6bn in unpaid taxes. Michel Sapin, the French finance minister, has said he won’t negotiate a deal with Google, but will instead pursue legal action.

The Italian authority reportedly started proceedings against Amazon last week, which it estimates could owe €130m for passing its earnings through Luxembourg.