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Google Slashes Tax Bill by Moving €16bn into Bermuda Shell Company

Wednesday, January 3, 2018 7:49
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Google saved about €3bn in taxes after moving €15.9bn through low-tax European countries into a Bermuda shell company last year, regulatory filings in the Netherlands revealed.

The internet search giant, owned by Alphabet Inc (NASDAQ:GOOGL), books most of its international advertising revenue in Ireland where taxes are low.

The cash is then moved to a company in the Netherlands where tax laws are also generous before being funnelled into a Bermuda mailbox owned by another Ireland-registered company. Bermuda’s corporate tax rate is zero.

This strategy Google uses to shield most of its international revenue from taxation is known as the ‘Double Irish’ and ‘Dutch Sandwich’.

According to company filings with the Dutch Chamber of Commerce dated 22 December and made available online on Tuesday, the amount of cash moved through this tax structure in 2016 was 7% higher than a year ago.

The Irish government closed the tax loophole that allowed for the ‘Double Irish’ strategy in 2015 but companies already using it were allowed to continue doing so until the end of 2020.

A spokesman for Google said: “We pay all of the taxes due and comply with the tax laws in every country we operate in around the world. We remain committed to helping grow the online ecosystem.”

Google’s global effective tax rate was 19.3% in 2016, according to US financial filings, meaning it would have saved US$3.7bn (€3bn) in taxes using the Double Irish’ and ‘Dutch Sandwich’ structures.

The company held US$60.7bn overseas at the end of 2016 on which it hadn’t paid US income taxes or foreign withholding taxes, Google revealed in a filing with the US Securities and Exchange Commission.

US President Donald Trump’s tax reforms passed in December means companies will have to start paying taxes on overseas income they’ve stockpiled to date.

Previously companies were allowed to defer paying US taxes on foreign income until returning the profits to the United States.

The European Union is also drawing up plans that will force US tech companies, including Google, to pay more taxes

Story by ProactiveInvestors




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