Google Moved $23 Billion to Bermuda Tax Haven in 2017

Proving that major multinational corporations are not above using tax havens, records indicate that Google moved $23 billion to tax haven Bermuda in 2017. This was done via a Dutch shell company and was in line with an arrangement to bring down its foreign tax bill. This information came to light earlier this year based on documents filed at the Netherlands Chamber of Commerce.

Details

The documents in question were filed on Dec. 21, 2018 with the Dutch Chamber of Commerce. They show that the funds were channeled via Google Netherlands Holdings BV and amounted to €19.9 billion, the equivalent of $22.7 billion. To put this in perspective, that 2017amount is around €4 billion more than Google channeled the same way in 2016.

What Google Has to Say

Discussing the movement of these funds to the Bermuda tax haven, Google said that the company always pays its taxes due. Google also stated that it complies with the tax laws in every country it operates in.

Google further pointed out that most of its corporate income tax is paid in its home country like other big multinational companies. The company revealed that in the past decade, its global effective tax rate reached 26 percent.

How Using the Subsidiary Works

Google has used this subsidiary in the Netherlands for years. The result is the ability of Alphabet, the owner of Google, to have a low corporate tax rate on profits outside the United States. In fact, its effective tax rate is in the single digits, which is around a quarter of the typical average tax rate in the overseas markets the company operates in.

Specifically, Google uses the Dutch subsidiary to move revenue from royalties that are not earned in the United States. These royalties go to Google Ireland Holdings, which is an affiliate that has its base in Bermuda. This allows Google to take advantage of the fact that Bermuda companies do not pay any income tax. This is a legal tax strategy frequently called “double Irish, Dutch sandwich.” It enables Google to avoid triggering European withholding taxes or US income taxes on the majority of its overseas profits.

Changes

The European Union and the United States have placed a great deal of pressure on Ireland, and as of 2014, the country decided to begin phasing out the arrangement. The tax advantages enjoyed by Google will fully end in 2020.

Source:

https://www.theguardian.com/technology/2019/jan/03/google-tax-haven-bermuda-netherlands