Google’s Irish And Dutch Accountancy Shields Billions Of Euros From Taxes

According to Bloomberg, in 2016 the Silicon Valley company behind the Google brand name, Alphabet Inc, transferred some €15.9 billion ($19.2 billion) to a shell company in Bermuda, reducing the corporation’s tax liability by several billion dollars for that year.

Google uses two structures, known as a “Double Irish” and a “Dutch Sandwich,” to shield the majority of its international profits from taxation. The setup involves shifting revenue from one Irish subsidiary to a Dutch company with no employees, and then on to a Bermuda mailbox owned by another Ireland-registered company.

The amount of money Google moved through this tax structure in 2016 was 7 percent higher than the year before, according to company filings with the Dutch Chamber of Commerce dated Dec. 22…

Last year, the company escaped a 1.12 billion euro French tax bill after a court ruled its Irish subsidiary, which collects revenue for ads the company sells in France, had no permanent base in the country.

The Irish government closed the tax loophole that permitted “Double Irish” tax arrangements in 2015. But companies already using the structure are allowed to continue employing it until the end of 2020.

According to U.S. financial filings, Google’s global effective tax rate in 2016 was 19.3 percent, which it achieved in part by shifting the majority of its international profit to the Bermuda-based entity. Applying that tax rate, Google would have saved $3.7 billion via the 2016 transfer.

Google Ireland Ltd. collects most of the company’s international advertising revenue and then passes this money on to Dutch subsidiary Google Netherlands Holdings BV. A Google subsidiary in Singapore that collects most of the company’s revenue in the Asia-Pacific region does the same.

The Dutch company then transfers this money on to Google Ireland Holdings Unlimited, which has the right to license the search giant’s intellectual property outside the U.S. That company is based in Bermuda, which has no corporate income tax. The use of the two Irish entities is what gives the structure its “Double Irish” moniker and the use of the Netherlands subsidiary as a conduit between the two Irish companies is the “Dutch Sandwich.”

At the end of 2016, Google, in one form or another, held over $60 billion in overseas reserves, none of which had yet to be subject to US taxation. Meanwhile, the Irish Government is continuing to drag its feet on the collection of €13 billion ($15.4 billion) in corporate taxes owed to Ireland by Apple Inc. A financial windfall most of us suspect will never be reaped. At least for the benefit of the citizens and communities whose lives it could transform.

Advertisements

2 comments

  1. We all know how corrupt the Irish government are, indeed G2 hate me reading or replying to your blogge. Well, they hate anyone reading or replying to you. Keep up the good work. Go from being a small thorn in the side to a large one.

  2. I remember the gnashing of teeth from the UK when Ireland reduced coporation tax to 12,5% saying it would hurt UK corporate setups. As I see it, it doesn’t matter much what tax level is set if they have ways of avoiding paying it. It will need a multi national approach, the US is also hurting from tax avoidance, so perhaps. In the solution debate there will always be winners, losers and of course corporate lobbyists.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s