The American based company, Google, used a subsidiary in the Netherlands to shift revenue to Google Ireland Holdings totaling 22.7 Billion in 2017 according to documents filed at the Dutch Chamber of Commerce which allows Google to reduce its foreign tax bill. That amount is over 4 billion more than what filings from 2016 show.
Tax Shelter Details
Google used a strategy called the “Double Irish, Dutch Sandwich” to avoid triggering taxes on the funds. The approach is legal but will soon be put out of use because of Ireland’s law changes that began phasing out the ability for Google and it’s subsidiaries to continue shifting funds tax-free in 2014 and will ultimately end in 2020.
For more than a decade the arrangement has allowed Google owner Alphabet (GOOGL.O) to enjoy an effective tax rate in the single digits on its non-U.S. profits, around a quarter the average tax rate in its overseas markets–Reuters [1].
It’s Legal
“We pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” Google said in a statement.
And, Google is correct. Tax havens are not illegal. They are doing what business does- increase margins.
Other Companies Targeted
Apple, Facebook, and Amazon have also been singled out for sophisticated use of fiscal loopholes to pay as little tax as possible. In Europe, they often benefit from favorable rates in Ireland and Luxembourg [2].
Notes:
- ^Reuters Editorial. “Google shifted $23 billion to tax haven Bermuda in 2017: filing.” U.S, 4 Jan. 2019, www.reuters.com/article/us-google-taxes-netherlands/google-shifted-23-billion-to-tax-haven-bermuda-in-2017-filing-idUSKCN1OX1G9. Accessed 4 Jan. 2019. (go back ↩)
- ^“Google moved almost 20 bn euros to Bermuda in 2017: report.” France 24, 4 Jan. 2019, www.france24.com/en/20190104-google-moved-almost-20-bn-euros-bermuda-2017-report. Accessed 4 Jan. 2019. (go back ↩)
