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article imageGoogle avoided a $3.6 billion tax payment thanks to a loophole

By Claudio Buttice     Dec 23, 2016 in Business
Google saved a total of $3.6 billion from its tax year 2015 by using a perfectly legal exploit called "Dutch Sandwich" or "Double Irish."
Bloomberg reports that the search engine giant was able to cut $15.5 billion worth of abroad taxes to an astounding 6.9 percent by using a very well known loophole used by many other corporations. The whole process revolves around shuffling profits through a number of subsidiary companies located in countries with low tax rates (such as Ireland and the Netherlands) and then moving then towards off-shore tax havens such as the Cayman Islands or Bermuda.
The company shifted its advertising revenues outside the United States towards a company called Google Ireland Limited to exploit its lower corporate tax rates, and then siphoned the profits to a second Dutch subsidiary, Google Netherlands Holdings BV. The last step of the Double Irish and Dutch Sandwich ends with the money being finally moved to the last company in Bermuda known as Google Ireland Holdings Unlimited. Although no real fraud is involved, it's pretty clear that moving that money so many times is just a ruse. The Bermuda company may, in fact, claim ownership of the properties since it has the right to license Google intellectual property, yet it has no employees.
According to filings Google made with the Dutch Chamber of Commerce last week, the corporation moved 40 percent more money than last year, sheltering a total of $58.3 billion from U.S. tax laws. The Irish government put a stop to the Double Irish exploit in 2015, however companies can still employ it to save their overseas profits up until 2020. Ireland itself seems to be scared of losing the enormous quantity of money that comes from giant corporations such as Apple investing in the country thanks to its low tax rate.
More about Google, Taxes, Loophole, exploit, dutch sandwitch
 
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