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Google Reportedly Shielded 16 Billion Euros From Tax

Google Reportedly Shielded 16 Billion Euros From Tax

Enterprise & IT Jan 2,2018 0

Alphabet's Google moved 15.9 billion euros ($19.2 billion) to a Bermuda shell company in 2016, regulatory filings in the Netherlands show.

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 and which were made available online Tuesday.

"We pay all of the taxes due and comply with the tax laws in every country we operate in around the world," a Google spokesman said in a statement. "We remain committed to helping grow the online ecosystem."

Last year, Google 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 European Union has been exploring ways to make U.S. technology companies, many of which use similar tax shelters, pay more.

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.

For years, U.S. tax law has given American companies an incentive to keep their foreign earnings offshore by allowing them to defer U.S. taxes until they return those profits to the U.S. But that changes this year; the U.S. tax law passed last month will require companies to pay taxes on the overseas income they've stockpiled to date at one of two rates: 15.5 percent for income held as cash or cash equivalents and 8 percent for less liquid assets.

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.

Tags: Google
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