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Italy expects to settle Google tax dispute this week - sources

By Emilio Parodi

MILAN (Reuters) - Italy expects to settle a tax dispute with Google's parent company, Alphabet Inc, this week, two sources close to the matter said on Wednesday, as the company seeks to end hostilities with tax authorities across Europe.

Alphabet is accused of avoiding taxes by booking income earned in higher-taxing European markets through a unit based in low-tax Ireland. It has already settled with Britain but remains in dispute with Italy, France and Spain.

Italy's tax authority and Google are close to agreeing that the firm pays a settlement of between 280 million and 300 million euros ($306-$328 million), the sources said. The deal would also include a change to Google's tax practices to ensure it pays tax on Italian-sourced income, the sources added.

Tax police alleged Google had not paid tax on about 1 billion euros of Italian revenue between 2009 and 2013.

The U.S. company has said in the past that it complied with tax rules in every country it worked.

"Google continues to work cooperatively with the Italian tax authorities," a Google spokeswoman said on Wednesday, when asked about a possible settlement in the coming days.

Last year, Italian tax police said Google should have paid taxes totalling 227 million euros between 2009 and 2013, including tax on the 1 billion euros of undeclared Italian revenue and tax on royalties received.

The sources said the agreement with Rome would also cover the period since 2013 and would give details on how the U.S. giant should book its revenues in Italy for tax purposes.

On Wednesday the head of the Italian tax authority, Rossella Orlandi, told Italian newspaper La Repubblica a deal with Google was "very close".

($1 = 0.9159 euros)

(Writing by Francesca Landini; Editing by Mark Bendeich)