Serving as Google's European, African and Middle Eastern headquarters, Dublin is the firm's largest operation outside the US, with employees of more than 40 nationalities. It provides a range of technical, sales and operations support, financial and shared services to Google’s customers in over 35 countries.

Over 600 new high level positions will be created in total over the next two to three years and Google said that it will be recruiting across the business – from operations, customer sales and engineering to legal, finance and human resources. Google currently employs over 800 people across Europe.

In order to accommodate its growing work force, Google has also signed a lease for a further 100,000 square feet beside its current European headquarters building on Barrow Street, Dublin.

Welcoming Google's plans, which are being carried out with the support of government promotional body IDA Ireland, Minister for Enterprise, Trade and Employment Micheál Martin noted that the company's decision is a firm endorsement of Ireland's ambition to become a leading hi-tech economy.

“Since its inception in Ireland in 2003, Google’s business has rapidly developed well ahead of expectations," he observed.

"This decision yet again demonstrates that Ireland is by far and away the primary location for the digital media industry in Europe and second only to Silicon Valley in the US," the minister added.

With a corporate tax rate of 12.5%, Ireland offers significant tax advantages to American companies looking for a European base. However, Angus Kelsell, Google's European finance director, was quoted by the Irish Times as suggesting that the firm's decision to invest in Ireland "is not tax related".

"It is to do with supporting our European business," he stated.

John Herlihy, European Director of Online Sales & Operations added that: “Basing our European operations here in Dublin has proven to be a great decision. We have found that the quality of the Irish workforce has enabled us to improve our products and services in a way that has proven to be highly beneficial for our customers, both users and advertisers."

According to the Times, which cited documents lodged with the Securities and Exchange Commission in the US, Google has "significantly lowered" its tax bill for the first nine months of 2005 thanks in part to its Irish operation, with the firm's effective tax bill having fallen to 31% from 39%.

Google was founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin. By September 2005, 133 million people across Europe were using Google, accounting for 83% of the region's internet users and 84% of all search page views (30.1 billion), according to Comscore Media Metrix.