Google Pays Israel $373 Million in Taxes
Google’s acquisition of Waze, an Israeli based app that crowd-sources traffic information, will cost the company $373 million in taxes, according to Haaretz. Google acquired Waze in June, following rumors that Apple and Facebook were both bidding for the company. Israeli news publication, Haaretz reports that the tax revenue from Google’s purchase is the second largest that Israel has ever received. The largest sum amounted to $500 million in taxes from an M&A deal between the Wertheimer family and Berkshire Hathaway.
To avoid other taxation—in this case, from the United States—Google may register Waze intellectual property outside of the U.S. Though Google’s plan for the intellectual property is not yet known, the company typically registers its intellectual property outside of the States. Because the funds Google used to purchase Waze came from a company registered in Bermuda, Haaretz speculates that Google may register the intellectual property there as well.
Before taxes, the purchase of Waze cost Google $966 million. Google’s acquisition of the company represents a growing trend in the Israeli tech industry. Israel-based companies have changed their business strategy, according to Bloomberg. Rather than selling companies in their early stages, business owners in Israel have begun growing their companies before looking to sell. At the time that Google acquired Waze, the smart phone app had already attracted nearly 50 million users.
In addition to Waze, Google has acquired several other companies in recent months. Among these companies is Bitspin, the Swiss creator of the Timely Android alarm clock app. Google also purchased apps like Bump (costing the company $40 million) and Flock, but announced just months later that the apps would be discontinued.
Started in 2008, Waze allows users to report on and find out about traffic data. The crowd-sourcing app quickly garnered wide-spread attention, and was able to expand into Asia by 2010. Waze’s deal with Google stipulated that the company stay in Israel. The deal also gave each of the company’s 100 employees an average of $1.2 million each, which is reportedly the most lucrative buyout in Israeli history. The agreement to keep Waze in Israel helped Google beat Facebook who held back from this commitment during negotiations.