Italian prosecutors are investigating at least three managers at Alphabet Inc's Google as part of a probe into the company's suspected evasion of taxes worth 227 million euros (NZ$386 million), investigative sources say.
Lawmakers across Europe are looking for ways to change tax rules which allow multinationals to shift untaxed profits into low-tax jurisdictions.
Meanwhile, tax authorities in some countries, including Italy, are also trying to use existing tax rules to force companies to pay more tax on the profits generated by sales in their countries.
In response to a request for comment on the investigation, Google said in a statement on Thursday (local time), "Google complies with the tax laws in every country where we operate. We continue to work with the relevant authorities."
It made the same statement in response to reports last month that the Italian authorities were accusing the company of evading paying 227 million euros in taxes between 2009 and 2013.
The individuals under investigation by a prosecutor in Milan sit on the board of Google Ireland, the company's regional base, the sources said.
Italy believes the company failed to declare some 100 million euros in revenues over five years which would have fallen into a 27 percent corporate tax bracket, investigative sources said in January.
Finance police also suspect the company should have disclosed some 600 million euros of royalties which would have led to a tax demand for some 200 million euros.
During a parliamentary hearing in London on Thursday, Google declined to confirm Italy's tax claims and a similar discussion in France.
Google has based its regional headquarters in Dublin, where corporate tax rates are much lower than in Italy.
The firm says its Italian presence merely provides consulting and marketing services for Google Ireland, the Middle East and Africa.