Search engine giant Google is challenging a €32m fine being imposed by the Turkish government, saying it runs its ad network from Ireland and therefore does not have to pay tax there.

The Turkish government says Google, which employs 1,500 people at its European headquarters in Dublin, should pay taxes on revenue generated by the company in Turkey. It has been investigating the company for more than a year.

"Google complies with tax law in every country in which it operates. We are currently in discussion with the Turkish authorities about this, and are confident we comply with Turkish law," a spokeswoman for Google told the Sunday Tribune last week.

Google's chairman and chief executive Eric Schmidt said last month that the company intended to increase the amount of staff it employs in Dublin. It is currently based in Liam Carroll's Gasworks development, which is nicknamed Googleland. Last year Carroll tried to expand the headquarters building, claiming that the company was planning to double its workforce here to 3,000 within 18 months. However, Google sources played that down at the time saying that 500 more jobs was a more reasonable expectation.

Google Ireland had a turnover of nearly €5.3bn in 2007, up nearly €2bn on the previous year. It had shareholders' funds of nearly €35m at the end of the 2007 financial year.