Update: Tues Dec 13th: Google announces over 600 new jobs at European headquarters in Dublin Ireland

Google is to increase the size of its Dublin operation creating just under 700 new jobs.

The Internet search company is to announce the decision tomorrow. The expansion of the operation will bring the total to be employed by Google in Ireland to well in excess of 1,000.

Google staff in Dublin - Google founders Larry Page and Sergey Brin, who joined Mary Harney, Tanaiste (Deputy Prime Minister) to formally open the Dublin office in June 2004.

The new jobs are high skilled posts for graduates with technology or languages qualifications and the decision to locate here is understood to be based in part on Google's examination of the quality and number of graduates being produced by the Irish educational system. Almost all employees at Google's operation in Dublin are college graduates.

Other attractions that led to the decision are the low corporation tax rate here and the relatively attractive income tax rate. The new positions will be for Irish workers and workers from across Europe.

Google's Irish operation, on Barrow Street, Dublin 4, is the multinational's headquarters for its European, Middle Eastern and African activities and is Google's largest base outside the US. It was set up in 2003.

The jobs announcement is expected to be made tomorrow by Minister for Enterprise, Trade and Employment, Micheál Martin.

A spokeswoman for his department would not comment when contacted yesterday. A spokesperson for Google could not be contacted.

The decision is a significant boost for the Government and IDA Ireland and their objective of attracting high end, knowledge economy jobs to Ireland. The competition for such jobs in Europe is intense.

A recent filing in the US by Google stated it had "significantly" lowered its effective tax rate for the first three quarters of 2005 thanks to its Irish operation. The filings indicated the multinational's effective tax rate had dropped from 39 per cent to 31 per cent, saving it tens of millions of euros.

"This is primarily because more of our earnings in 2005 compared to 2004 are expected to be recognised by our Irish subsidiary and such earnings are taxed at a lower statutory tax rate (12.5 per cent) than in the US (35 Per cent)," the filing stated.

It warned that if future turnover at its Irish subsidiary was not as proportionately high as expected, then the multinational's effective tax rate might increase.

Google Ireland had a turnover of €603 million in 2004. Another Irish subsidiary, Google Ireland Holdings, owns the rights to, and is working on developing, the intellectual property used in Google's activities. The company spent €102.5 million in 2004 acquiring intellectual property from its US parent. Ireland has attractive tax structures for companies developing and holding intellectual property.